ENGINEERING support services group Redhall crashed into the red after making an £8.4m provision for its legal dispute with Vivergo biofuels plant near Hull.
The Wakefield-based group is locked in a dispute over a contract for work on the plant, which was prematurely terminated in March.
With a further £2.9m provision to cover restructuring costs, Redhall announced a total £11.3m provision for exceptional items in the year to September 30.
This wiped out a £3.2m pre-tax profit, leaving the group with annual losses of £8.1m.
Chairman David Jackson said: “We have established via an adjudication process that our contract with Vivergo was unlawfully terminated and although the client has started proceedings in the High Court in an attempt to overturn this decision, the board supported by strong legal opinion believes this will be unsuccessful and may, under the Judge’s direction, lead to an equitable settlement.
“Our primary objective is to settle the Vivergo dispute equitably and to take the business forward with the considerable opportunities available to us in our chosen market sectors,” he added.
Redhall said it is in a much better position than it was six months ago and it anticipates further improvements in the next half year.
“This is an exciting time for the prospects of Redhall,” said Mr Jackson. “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.
“We have the best tender prospects that I have seen in this business and an order book with good gross margin potential.”
The group said second half trading in the six months to September 30 improved materially compared to the disappointing first half and this positive trend has extended into October, November and December.