Turnover drops but Redhall looks to progress
The Wakefield-based group, which issued a profits warning and the departure of its chief executive last week, said turnover fell nine per cent to £51.4m in the six months to March 31 and adjusted pre-tax profits tumbled from £500,000 to £200,000.
Chairman David Jackson said the new management team will concentrate on increasing margins in the short term rather than top line growth .
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Hide Ad“Once we have achieved this we can again look to grow,” he said. “The board remains convinced that the group’s future prospects are strong.”
Former chief executive Richard Shuttleworth resigned with immediate effect last week and was replaced by group commercial director Phil Brierley.
Analyst David Buxton at FinnCap said: “Redhall’s interim results are overshadowed by the two recent trading updates and management changes. Following the recent profits warning we placed our forecasts under review, seeking greater clarity from interim results and the new management.
“We now introduce lowered 2014 forecasts, with an adjusted pre-tax profit of £1.0m, down 50 per cent from £2.1m.
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Hide Ad“New management needs to demonstrate a recovery in profitability, while it will also take time to stabilise and restore the market’s confidence in the shares. As such we believe a ‘Hold’ rating is appropriate.”
Redhall’s interim finance director Chris Kelly, the former finance director of Town Centre Securities, was appointed group finance director in May.
Mr Jackson said projects for key customers were delayed in the first half as a result of budgetary pressures and extended sign-offs.
“While most engineers are seeing market recovery, Redhall is still experiencing project delays and reductions in the expected order pipeline,” said Mr Buxton.
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Hide AdMr Jackson said the group has set expectations for the current year which reflect these delays and a more prudent approach has been adopted to future forecasting.
“There has been considerable management change during the last 18 months including the recent appointment of a new chief executive and group finance director,” he said.
“The board’s objective for the next 18 months is to have stability in the management teams as change inevitably brings uncertainty, disruption and cost.”
The group’s current order book stands at £85m, down from £111m at the year end. Mr Jackson said the group has re-assessed its framework contracts based on current activity levels, which has resulted in a £30m reduction in the order value.
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