23rd Jan 2009 16:32
Redhall Group plc
("Redhall" or the "Company")
Trading Update
Redhall, the specialist engineering support services group, announces that it has been informed by Sea Dragon Offshore Limited that they no longer intend to continue with the contracted fit-out of the Sea Dragon semi-submersible oil rig scheduled for the second half of the financial year ended September 2009. The work is being undertaken by Chieftain, the wholly owned subsidiary of Redhall acquired in October 2008, under a contract signed in April 2008. The Company is currently taking legal advice on the possible redress afforded to it and potential level of compensation on the basis that the contract is not fulfilled.
The fit-out was due to commence during January 2009 at the Company's facilities in the North East and Redhall has manufactured pipe work required to commence the fit-out. The total contract value is approximately £9.0 million and was expected to contribute approximately £1.0 million to operating profit for the Company's results for the year ended 30 September 2009. Initial discussions with Sea Dragon Offshore Limited have indicated that they are prepared to make certain reparations should the contract not be replaced. Formal negotiations with regard to compensation payable by Sea Dragon Offshore Limited are expected to take place as soon as possible. Redhall has also commenced discussions with other potential parties of similar tender types regarding replacing the revenue expected under the Sea Dragon contract. Management are confident that various actions can be taken to mitigate the effects of this contract termination.
Further announcements will be made in due course once the Company has received formal legal advice as to what action can be taken..
Redhall has experienced a strong start to trading in the first quarter for the year ending 30 September 2009, with profit before tax and exceptional items ahead of budget. Cash balances as at 31 December 2008 were £10.3 million (Net cash balance of £5.6million).
For more information please contact:
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Redhall Group plc David Jackson/Simon Foster |
Tel: +44 (0)1924 385 386 |
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Altium |
Tel: +44 (0)161 831 9133 |
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Phil Adams/Paul Lines/Simon Lord |
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