Redhall hit by legal fight but says future bright

Redhall, the engineering support services group, saw full year profits plunge but in line with expectations.

Adjusted pre-tax profits for the year to the end of September were £3.9m, a 45% fall on £7.0m the firm made in 2010.

However, exceptional items worth over £11m saw profits fall £8m into the red.

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Revenues came in at £126.6m, down 12% on the prior year's figure of £144.7m.

However, the firm said it seen greatly improved trading in the second half, particularly in its defence and energy sectors.

Chairman David Jackson said the firm was in a much better position than it was six months ago and he anticipated further improvements in the next half year.

"We are on the cusp of the biggest opportunity in the engineering industry for decades with the commencement of the UK nuclear new build programme," he said.

"We have the best tender prospects that I have seen in this business and an order book with good gross margin potential."

Redhall is currently fighting a High Court over whether its contract with Vivergo Fuels was unlawfully terminated.

Vivergo is a a joint venture between BP, British Sugar and DuPont.

Redhall was awarded £700,000 compensation after an adjudication ruled the contract termination was unlawful but Vivergo has since taken the dispute to the High Court.

Redhall said that it remained confident it would win the legal battle but an exceptional charge of £8.4m was included within its results for money lost from the termination of the contract.

"This is in no way a reflection of a just award for the work undertaken under the contract," the firm said.

"It is more an acceptance that the process of recovery of outstandings under English law is an extremely lengthy and expensive process."

In light of the overall trading performance and the exceptional charge the firm said it would not pay a dividend.