RHL.L Regulatory News (RHL)

8 Jun 2006 07:00

Redhall Group PLC08 June 2006 For Immediate Release 8 June 2006 Redhall Group plc ("Redhall" or the "Group") Interim Results for the six months ended 31 March 2006 Redhall Group plc, the specialist engineering support services group, announces its interim results for the six months ended 31 March 2006 Key points • Turnover up 6% at £14.0 million (2005: £13.3 million) • First half-year trading profit for four years • Operating profit of £203,000 (2005: operating loss of £213,000) • Profit before taxation and exceptional items of £113,000 (2005: loss of £386,000) • Earnings per share of 0.85p (2005: loss per share of 1.78p) • £13 million contract for nuclear store won • Forward order book of £34 million • Strong cash performance - net cash position of £1.4 million (31 March 2005: net debt of £611,000) David Jackson, Chairman and Chief Executive of Redhall, commented: "I am pleased to report strong progress in the recovery of the Group which hasenabled us to announce our first interim profit since 2002. The removal of theshadow of legacy contract issues and the greater focus of our businesses havealready started to yield results. This is a small indication of the long termpotential of the business as a niche engineering support services group." For more information please contact:Redhall Group plc Tel: +44 (0)1924 385 386 David Jackson, Chairman and Chief ExecutiveSimon Foster, Deputy Chief ExecutiveChristopher Lewis-Jones, Group Finance DirectorBuchanan Communications Tel: +44 (0)20 7466 5000 Tim Anderson / Isabel Podda REDHALL GROUP PLCRESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2006 CHAIRMAN'S STATEMENT Introduction I am pleased to report strong progress in the recovery of the Group which hasenabled us to announce our first interim profit since 2002. The removal of theshadow of legacy contract issues and the greater focus of our businesses havealready started to yield results. This is a small indication of the long termpotential of the business as a niche engineering support services group. Trading Results Turnover for the six months ended 31 March 2006 increased 6% to £14.0 million(2005: £13.3 million) and we achieved an operating profit of £203,000 (2005:operating loss of £213,000), a turnaround of £416,000 since the 2005 interims.Earnings per share were 0.85p (2005: loss per share 1.78p). I am satisfied withthis first step towards producing a profit more in line with the capability ofthe Group. Operating Review Overall the Group's operations have made important advances in the first sixmonths. Booth Industries and Jordan Manufacturing saw growth in sales whilst inJordan Nuclear and CHB-Jordan Engineering trading was flat. Although volumeswere behind our expectations careful cost and contract control in our first sixmonths has resulted in improved margins across all businesses. Booth Industries had a strong start to the year with a better balance of oil andgas and infrastructure work. Recent investment in research and development todiversify its product portfolio is paying off with turnover of £4.2 million up26% on the previous year. The most notable contract was the £2.2 million DublinPort Tunnel Door contract which commenced in 2005 and was substantiallycompleted in the period. The raising of safety standards in the onshore andoffshore oil and gas industry following recent incidents together with a greaterlevel of general investment has also resulted in activity levels rising towardsthe end of the half-year. The increased turnover and cost control resulted inoperating margins improving to 9.4% (2005: 8.5%). As reported in my last Chairman's statement, Jordan Nuclear has been impacted inthe short term by a slower than anticipated spend by its principal client,British Nuclear Group. This was as a result of the continued change in thesupply chain following the creation of the Nuclear Decommissioning Authority ("NDA"). These uncertainties are already diminishing and tender activity levelsfor our maintenance and decommissioning services are at an all time high.Turnover levels fell in the period compared to 2005, which had included a majorcontribution from the £7 million MA1 Cell contract at Sellafield. Given this, itis a credit to the quality of the business that it delivered improved margins of2.8% and performed in line with our expectations. CHB-Jordan Engineering, the Group's site-based oil, gas and petrochemicalfacilities maintenance business, performed in line with expectations deliveringturnover comparable with 2005. It secured a five year extension to itsfacilities management contract with Polimeri Europa which is expected to have atotal value of at least £10 million over five years. This, along with a renewedfocus on project engineering opportunities particularly in the field of majortank repair and refurbishment, enabled the business to deliver an improved grossmargin of 15.1% (2005: 13.4%). Jordan Manufacturing, the Group's specialist stainless steel fabricatorexperienced the greatest improvement year on year with an increase in turnoverof over 200%. The business has recovered strongly since the cessation of thecontract to supply nuclear transport vessels. A major contribution was made bythe enabling contract to manufacture the storage modules for the SellafieldProduct Residue Store ("SPRS"). We have also made significant headway indiversifying into non-nuclear markets with successes in the architectural andprocess sectors. With the more intensive use of factory capacity during thefirst half-year the business has returned to operating profit. Dividend The Board has decided not to recommend an interim dividend (2005 interim: nil;2005 final: nil). Financial Position Our net cash position at £1.4 million (31 March 2005: net debt of £611,000)improved significantly from that reported at the year-end due to favourablepayment terms having been negotiated on certain contracts, and the finalsettlement of some older contracts which had been in dispute. The positive cashgeneration in the period coupled with the new senior debt facilities to which Ireferred in my last Chairman's statement enabled us to repay a further £500,000of unsecured convertible loan stock in the period. We are required to adopt FRS17 "Retirement Benefits" in the year ending 30September 2006 and the impact of this has been reflected in the results and thenet assets reported for this interim period. Because it is a change inaccounting policy it has also been reflected in the comparative periods. TheBoard is satisfied with the agreement it reached with the Trustees of theGroup's defined benefit pension scheme in 2004 to pay off this deficit over a 15year period. Prospects I am delighted to announce the award by Carillion plc (subject to contract) ofthe £13 million SPRS contract to manufacture and install a nuclear store atSellafield, Cumbria. In addition to the £9 million manufacturing orderreferred to in the announcement of 22 February 2006 we have also securedassociated installation works of approximately £4 million. Redhall, throughits subsidiaries Jordan Manufacturing and Jordan Nuclear, has been workingclosely with British Nuclear Group Sellafield Limited ("BN-GS") and Carillionplc to develop the project. The order represents the first major constructionaward since the formation of the NDA. The SPRS is necessary for Sellafield inorder to maintain its long term remediation capability. One of the keypurposes of the store is to accommodate materials already at Sellafield whichneed to be retrieved from older facilities, repackaged and placed in a modernfacility. It will receive materials recovered from historic fuel manufacturingbuildings that are now being decommissioned. The building will also supplementthe product storage capabilities of the Thorp reprocessing plant and SellafieldMOX plant. The nuclear sector is now buoyant and our tendering activity is at an all timehigh driven by a new political will. Jordan Nuclear, as part of an alliance teamhas been selected as one of four preferred framework alliance contractorsundertaking decommissioning projects at Sellafield. BN-GS has advised ananticipated contract volume of £10-15 million per annum per framework contract.We are also involved in several other short and longer term projects atSellafield and are actively looking to extend our presence at other nuclearsites in the UK. Booth Industries has secured a £1.2 million contract to supply specialiststainless steel cladding for the construction in Norway of two sixth-generationdeepwater drilling semi-submersibles, being the largest and most advanceddrilling rigs in the world. There is a strong possibility that the contractcould increase in value next year if two additional rigs are ordered. Overallour Group order book stands at £34 million. I believe that phase one of our project to revive the Group is well on course.We shall now turn our attention to adding growth by acquisition to our goodorganic growth. In the initial stages I would anticipate targeting acquisitionswhich fall within the existing funding capability of the Group unless aparticularly compelling opportunity is unearthed. We shall concentrate on ourexisting areas of activity and those of specialist contracting servicesparticularly of an environmental nature. David JacksonChairman and Chief Executive8 June 2006 Redhall Group plc Consolidated Profit and Loss Account (Unaudited) Note Half-year Half-year Year ended 31 March 31 March 30 September 2005 2006 2005 (audited) Restated Restated £000 £000 £000 ---------- ---------- ----------Turnover 14,028 13,283 24,573 ---------- ---------- ---------- Operating profit/(loss) onordinary activities 203 (213) (3,549) Exceptional itemsProfit on disposal of fixed asset - 148 148 Net interest payable (90) (173) (264) ---------- ---------- ----------Profit/(loss) before taxation 113 (238) (3,665) Taxation - - (78) ---------- ---------- ----------Profit/(loss) for the periodtransferred to/(from) reserves 113 (238) (3,743) ========== ========== ========== Earnings/(loss) per share 1 - basic 0.85p (1.78)p (28.03)p - diluted 0.84p (1.78)p (28.03)p Redhall Group plc Consolidated Statement of Total Recognised Gains and Losses (Unaudited) Half-year Half-year Year ended 31 March 31 March 30 September 2006 2005 2005 (audited) £000 Restated Restated £000 £000 Profit/(loss) for the period 113 (238) (3,743)Actuarial loss in respect of definedbenefit pension scheme - - (254)Surplus on revaluation of properties - - 14 ---------- ---------- ----------Total recognised gains/(losses)relating to the period 113 (238) (3,983) ========== ========== ========== Redhall Group plc Consolidated Balance Sheet (Unaudited) As at As at As at 31 March 31 March 30 September 2006 2005 2005 £000 Restated (audited) £000 Restated £000 Fixed assets ---------- ---------- ----------Tangible assets 2,393 2,354 2,444 ---------- ---------- ---------- Current assetsStocks 175 189 184Debtors 7,007 10,402 8,045Cash at bank 2,267 1,002 1,442 ---------- ---------- ---------- 9,449 11,593 9,671 Creditors: amounts falling due withinone year (8,449) (5,700) (7,398) ---------- ---------- ----------Net current assets 1,000 5,893 2,273 ---------- ---------- ----------Total assets less current liabilities 3,393 8,247 4,717 Creditors: amounts falling due aftermore than one year - (1,375) (1,390) ---------- ---------- ----------Net assets excluding pension schemedeficit 3,393 6,872 3,327 Pension scheme deficit (4,731) (4,578) (4,778) ---------- ---------- ----------Net (liabilities)/assets includingpension scheme deficit (1,338) 2,294 (1,451) ========== ========== ========== CapitalCalled up share capital 3,338 3,338 3,338 ReservesShare premium account 578 578 578Merger reserve 294 294 294Revaluation reserve 1,033 1,019 1,033Profit and loss account (6,581) (2,935) (6,694) ---------- ---------- ----------Equity shareholders' (deficit)/funds (1,338) 2,294 (1,451) ========== ========== ========== Redhall Group plc Consolidated Cash Flow Statement (Unaudited) Note Half-year Half-year Year ended 31 March 31 March 30 September 2006 2005 2005 £000 £000 (audited) £000 Cash inflow/(outflow) fromoperating activities 2 1,657 (511) 206 Returns on investments and servicing of financeInterest paid (145) (131) (185)Interest received 13 19 48Interest element of finance lease rentals (1) (1) (1) TaxationUK Corporation tax paid - - - Capital expenditure and financialinvestmentPurchase of tangible fixedassets (65) (25) (200)Proceeds from disposals oftangible fixed assets - 250 277 DisposalDisposal of OaklandElevators Limited: Deferred consideration less costs - 846 846DividendsEquity dividends paid - - - -------- ---------- ----------Net cash inflow beforefinancing 1,459 447 991 FinancingFinance leases (6) (6) (11)Medium term loanrepayments (100) (100) (200)Loan stock repayments (528) (529) (528) -------- ---------- ----------Increase/(decrease) incash for the period 3 825 (188) 252 ======== ========== ========== Notes to the Cash Flow 1. Earnings/(loss) per share The calculation of basic earnings/(loss) per share for the six months ended 31March 2006 is based on 13,354,471 shares (31 March 2005: 13,353,606; 30September 2005: 13,353,606) being the weighted average number of shares in issuethroughout the period, and on the profit of £113,000 (31 March 2005: restatedloss £238,000; 30 September 2005: restated loss £3,743,000). The diluted earnings per share is based on the basic earnings for the period of£113,000 and on 13,456,912 diluted weighted average ordinary shares ascalculated below. The conversion of loan stock would have the effect ofincreasing the earnings per share and is, therefore not a dilution under theterms of FRS22. For the periods to 31 March 2005 and 30 September 2005, the lossattributable to ordinary shareholders and weighted average number of ordinaryshares for the purpose of calculating the diluted earnings per share areidentical to those used for the basic earnings per share. This is because theexercise of share options and the conversion of loan stock would have the effectof reducing the loss per share and is, therefore, not a dilution under the termsof FRS22. Half-year Half-year Year ended 31 March 31 March 30 September 2006 2005 2005 (audited) Number Number Number Basic weighted average number of shares 13,354,471 - -Dilutive effect of share options 102,441 - - ----------- ---------- ---------- 13,456,912 - - =========== ========== ========== 2. Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operating activities Half-year Half-year Year ended 31 March 31 March 30 September 2006 2005 2005 £000 Restated (audited) £000 Restated £000Operating profit/(loss) on ordinaryactivities 203 (213) (3,549)Difference between pension charge andcash contributions - (20) (40)Depreciation charge 116 99 191Loss on sale of tangible fixed assetsincluded within the operatingprofit/(loss) on ordinary activities - - (3)Decrease/(increase) in stocks 9 (2) 3Decrease in debtors 1,038 915 3,194Increase/(decrease) in creditors 291 (1,290) 410 ----------- ---------- ----------Net cash inflow/(outflow) from operatingactivities 1,657 (511) 206 =========== ========== ========== 3. Reconciliation of net cash flow to movement in net debt Half-year Half-year Year ended 31 March 31 March 30 September 2006 2005 2005 £000 £000 (audited) £000Increase/(decrease) in cash in the period 825 (188) 252Cash outflow from decrease in debt andlease financing 634 635 739 ----------- ---------- ----------Change in net debt arising from cashflows 1,459 447 991New finance leases - - (16)Accrual of loan stock redemption premium (5) (25) (30) ----------- ---------- ----------Decrease in net debt during the period 1,454 422 945Opening net debt (88) (1,033) (1,033) ----------- ---------- ----------Closing net funds/(debt) 1,366 (611) (88) =========== ========== ========== Basis of Preparation of Interim Financial Information The interim accounts are prepared on the basis of the accounting policies setout in the Group's statutory accounts for the year ended 30 September 2005except for retirement benefits for which the Company has adopted FRS17"Retirement Benefits" that has resulted in a change in accounting policy. Thischange of accounting policy has resulted in a restatement of the results and netassets previously reported for 30 September 2005 and 31 March 2005. The resultsfor the year ended 30 September 2005 and for the six months ended 31 March 2005were reduced by £81,000 and £40,000 respectively. The net assets at 30 September2005 and 31 March 2005 were reduced by £4.9 million and £4.6 millionrespectively. In addition the net assets at 31 March 2005 have been restated toreflect the policy of revaluing long leasehold and freehold land and buildingsthat was adopted for the first time as at 30 September 2005. This resulted in anincrease in net assets at 31 March 2005 of £1.0 million. Taxation is calculated by applying the directors' best estimate of the annualtax rate to the result for the period. The financial information contained herein does not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. Theaccounts of the company for the year ended 30 September 2005 have been filedwith the Registrar of Companies and carry an unqualified audit opinion. Copies of this interim report are being sent to shareholders and are availablefrom the Company Secretary, Redhall Group plc, 1 Red Hall Court, Wakefield WF12UN. This information is provided by RNS The company news service from the London Stock Exchange