Engineering support services group Redhall said it is back on track following the exit from the riskier parts of its business.
The Wakefield-based firm said the first stage of its turnaround is complete following the sale of its engineering contracting subsidiary RESL last month for a headline consideration of £6.0m.
Redhall said the disposal is a significant step in its mission to reduce exposure to contracting, focusing the business on higher margin manufacturing activities and improving working capital.
The group reported an 18 per cent fall in revenue in the six months to March 31 to £41.1m and said the decline reflected customer delays and its controlled withdrawal from framework contracts.
The group made an underlying operating loss of £900,000, down from a profit of £1.1m while pre-tax losses increased from £1m to £9.6m.
The group’s shares closed down two per cent at 10.5p.
Phil Brierley, Redhall’s chief executive, said: “In December we announced a plan for how we are going to focus on the core of the business, the manufacturing side, and get the debt down.
“Over 60 per cent of the work we do now is higher margin and lower risk. All the legacy contracts are out of the way. The quality of the order book is high and it’s in the right sectors.”
He added that the firm expects to see a return to operating profit in the next financial year.
“We’ve put the business back on an even keel. We are in a good place to benefit from that,” he added.
The group said it has been successful in exiting, without terminating, a number of framework contracts.