Thursday, 13 June 2013 16:21
Redhall buoyed by record order booksWritten by Administrator
Engineering services provider Redhall Group plc has posted some positive figures for the six months to 31 March – not least a record order book of £152 million, about 50% higher than in the first-half of 2012.
As chairman David Jackson commented: "Recent orders and a record order book level of around £152.0 million to be executed over the next four years give the board confidence in the immediate prospects of the business."
Among recent contract in the mix were: A £26-million MDSW2 contract win at Sellafield with Hertel; a framework agreement for mechanical services at Dounreay; and £8.5m worth of orders from Hyundai Heavy Industries.
New orders further included: a £3-million three-year contract to partner PX on a combined heat and power plant at Sellafield; and a £3.3-million award from Air Products for work at its gas plant on Teesside.
On the other hand, Redhall's interim results with adjusted revenues down 5.4% year-on-year to £56.6 million and adjusted profit before tax and amortisation was £574,000, compared with £1.34 million in the first half of last year.
These reverses, though, were in line with management expectations, Redhall bosses adding that the group's performance is expected to be weighted towards the second half.
While market conditions remain challenging, Redhall chairman Jackson said principal clients remain confident in the group's ability to execute major projects.
Jackson cited how Redhall Nuclear is the main installation partner for Nuvia, which has secured a number of projects at the Sellafield site and is utilising. The value of the work to Redhall Nuclear will be circa £7m over the next two years.
Redhall is one of three contractors to have been awarded a framework agreement for mechanical services at Dounreay, which are valued at £20.0 million over four years.
In the manufacturing sector, the group has received a number of orders in the oil and gas sector for blast decks and panels from Hyundai Heavy Industries, Edward Greig and Talisman worth £11.0 million in aggregate;
"We await with interest the result of the Government's discussions with EDF on UK nuclear new build in general and Hinkley Point in particular," added Jackson.
Redhall's continuing legal dispute with Vivergo, however, remains unresolved, with Jackson hopeful of soon seeing a long-awaited court verdict in the near future on whether Redhall's contract was terminated unlawfully; and the level of extension of time that subsidiary RESL was entitled to under the contract.
In his review, chief executive Richard Shuttleworth said activity at the RESL engineering unit contributed revenue of £28.1 million, up 4.1% on 2012. Adjusted operating profit was £1.02 million (3.6% margin) compared with a 2012 figure of £744,000 (2.8% margin), reflecting operational improvements implemented within the business.
"Whilst the industrial market continues to be challenging, the business continues to secure an acceptable share of new opportunities as well as growing the work volumes from our existing customers under contracts that commenced prior to the period covered by this report," said Shuttleworth.
Nuclear segment turnover in the first half was £16.1 million, 11% lower than that achieved in the comparable period last year. Adjusted operating profit of £397,000 was significantly lower than last year's result of £624,000.
"We have now formally signed the contract with Hertel to provide multi-disciplinary site works at the Sellafield site which will run for up to four years," said the CEO. In addition the business was selected as a strategic partner by AWE to provide mechanical and engineering services at Aldermaston and Burghfield which also runs for up to four years.
"These two framework contracts underpin approximately 50% of the annual turnover of the Nuclear division. The transition between the old and new framework contracts has resulted in a lower than expected volume of work during the first half of this year. It is envisaged that work volumes will increase as the transition to the new framework contracts is completed."
Turnover in manufacturing for the period amounted to £12.4 million compared with £14.8 million in 2012, a decrease of 16.2%. Adjusted operating profit in the period was £731,000 compared with £1.35 million for the same period in 2012.
"Whilst this year's adjusted operating profit margin at 5.9% is disappointing compared with 9.1% for the same period in 2012 it does not accurately reflect the significant improvements which have been made in manufacturing by the new management team under the leadership of John Hynes who started with the business on 29 October 2012," said Shuttleworth.
Activity levels at Redhall's specialist door business in Bolton are showing signs of improvement with strong demand from the oil and gas and defence sectors, the CEO noted.
Published in Power & water
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