Redhall set for future growth

Welding taking place on a Redhall site
Welding taking place on a Redhall site
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Manufacturing and services group Redhall ​said it anticipates​ ​a significant improvement​ ​over the coming months after a "disappointing" performance in its first half.

The Wakefield-based firm ​was hit by delays in the timing of the Hinkley Point C awards​, but it has recently seen a big jump in its order book.

The group has secured two major programmes and said this demonstrates the magnitude of the manufacturing opportunity in the UK’s growing nuclear sector and Redhall’s ability to win such contracts. The firm's Jordan Manufacturing division has secured £18m of work under a framework with Cavendish Nuclear to manufacture containment systems and associated process equipment. The second contract is with Balfour Beatty, which has placed three large contracts for specialist manufactured metal products for the marine works at Hinkley Point C.

Redhall's CEO ​Wayne Pearson said: "Our business is focused on nuclear new build and decommissioning. Nuclear new build is being rejuvenated in the UK. Hinkley is the first station in 25 years - it's a new market."

Nuclear decommissioning could be worth £20m a year for Redhall over the next 10 years.

The group's order book now stands at £37m, excluding Jordan Manufacturing’s £18m framework award, up from £32m in December.

Revenue for the six months to March 31 fell from £19m to £15m and the group made an adjusted operating loss before interest, tax, amortisation, IFRS 2 credit and exceptional items of £1.9m, down from a £200,000 profit the previous half year.

Mr Pearson said the group is setting the foundations for growth and the market expects Redhall to be profitable in the full 2018 year.

"In many of our core markets we are seeing an increasing number of opportunities, which potentially offer substantial growth for Redhall in the medium and long term," he said.

​"​A further five nuclear power stations have been proposed for the UK which, if built, will provide​ ​sustained opportunities in this sector. The decommissioning market is dominated by Sellafield, in​ ​addition to which we are tendering for work at the Dounreay and Magnox sites, where we currently​ ​have framework agreements in place.​"

T​he group is​ also seeing renewed tender activity in the oil and gas markets as the oil price recovers.​

​A​nalyst John Cummins at WH Ireland said: "We believe that Redhall remains extremely well positioned in its chosen markets, as reflected by both the growth in the order book and strength of the tender pipeline.

​"​Following the results, our near-term estimate of fair value for the shares remains unchanged at 12.5p.​"​