Acquisitive Redhall may spend as much as £20m by year end

The Wakefield group has 7m-8m in cash and believes it could take on around 10m in debt.

Executive chairman David Jackson said: "We're going on the acquisitions trail. We are always looking at half a dozen opportunities. We can enhance earnings with a couple of add-on acquisitions."

He added that the main focus would be on the energy sector and he would like to see an acquisition before the end of the year.

He was speaking yesterday as the group said it has made good progress in testing markets and was looking forward to a surge in nuclear work.

Redhall, whose work ranges from designing and building a new bio-ethanol plant at the BP Chemicals Saltend site, to outfitting contracts for nuclear submarines, grew sales and profits in the six months to the end of March.

Revenues rose from 64.8m to 65.4m while adjusted pre-tax profits rose six per cent to 3.3m.

"We are pleased with the group's performance in the first half, which demonstrates that the business has retained its ability to deliver through a testing time in our markets," said Mr Jackson.

The group has started work on a 30m contract for BP's bio-ethanol plant at Saltend and expects to finish the project in early 2011.

Chief executive Simon Foster said green fuel is becoming an

increasingly important part of the group.

"It is a growing market," he said. "European legislation is demanding more green fuel."

Mr Jackson said that the group is seeing a number of customers return after trying out cheaper rivals.

"Some of our bigger clients have tried other contractors that have lowered their prices. They have found they are not working too well and are coming back to us," he said.

He said that the nuclear new-build programme creates significant long-term opportunities.

"The nuclear new-build programme is beginning to take tangible shape," said Mr Jackson. "We are reaching the stage where we have identified preferred partners for manufacturing and contracting and will be committing resource once timescales have been clarified by the new Government."

He said that the new coalition Government had committed itself to nuclear energy.

"There isn't an alternative. Ironically nuclear is one of the greenest energies. The big question is whether the Government has anything to put into the pot," he said.

Mr Foster said that all the work is private sector funded and the group has seen an improved picture since December.

Asked about when the market will pick up, Mr Jackson said it depends on when the economy picks up.

"I think we'll see another 12 months of austerity," he said. "After that it should improve."

Redhall said its key objective has been to "keep the business on a sound financial footing" during the tough economic climate. It grew net cash to 7.5m from 6.3m a year earlier.

The group is paying an interim dividend of 1.8p a share, a nine per cent increase on the previous year.

Nick Spoliar, analyst at Altium Securities, said Redhall has made good progress in the first half with results marginally ahead of his forecasts.

"The company performed strongly in energy and defence, reflecting its strength at major sites such as Aldermaston, Barrow and Sellafield, as well as at national energy sites," he commented.

"Margins rose significantly in both of these sectors, and further contracts were secured during the first half.

"We remain buyers for the exposure to areas with dynamic and exciting potential, backed up by a solid set of results.

Green opportunities

Redhall believes pressure on energy giants to develop green fuels could open up significant opportunities for it in the biofuel sector.

Two of Redhall's acquired companies, Chieftain Group and Jex Engineering, will build and install pipework on the bio-ethanol plant at BP's Saltend site near Hull.

The contract was won from Vivergo Fuels, a joint venture between BP, British Sugar and DuPont. It will derive the fuel from wheat, and the biofuel will then be mixed with conventional fuel.

"It's an area of the market we've focused on more recently. It's an area for future growth, " said chief executive Simon Foster.