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The share price of Redhall Group plc (LSE:RHL) gained 4.72% this morning as investors responded to the company’s announcement with AWE. The stock, which closed on 21 January at 63.50, skyrocketed to 67.84 in very early trading and rose to 67.90 just prior to 9:00 am before settling in at 66.50 just before 2:00 pm.
Redhall announced that its Redhall Nuclear division has been “selected as a mechanical and electrical engineering partner” to supply services to Britain’s Atomic Weapons Establishment (AWE). AWE provides and maintains the UK’s nuclear warheads throughout their entire life cycle. AWE’s contract with the UK, whereby it staffs and manages the government’s nuclear facilities, extends to 2025, which provides Redhall with a stable, long-term revenue source. The £50 million contract between Redhall Nuclear and AWE covers a four year period.
Redhall is comprised of three primary business segments: Redhall Manufacturing, Redhall Engineering, and Redhall Nuclear. Each of these segments tends toward provision of products and services for the defense and heavy manufacturing industries, for instance, security and blast walls for nuclear installations.
The company’s announcement this morning also included news of three other newly awarded contract totaling another £7.5 million. Whilst the company did not reveal the nature of two of the contracts, it did announce that the largest is a £4.1 million project between Redhall Manufacturing and Hyundai Heavy Industries. Though not much was revealed, reference was made to “expertise in blast doors and other blast and fire resistant structures,” and the BP Clair Ridge project.
The Clair Ridge project is located west of the Shetland Islands. Two new platforms to be linked together by a bridge are expect to be complete and in place sometime in 2015 with production scheduled to commence in 2016. Total estimated investment is approximately £4.5 billion. It’s not too difficult to add two plus two to understand Redhall’s role in the project.
Redhall may not be the biggest fish in the sea, but it has developed a niche that should provided it plenty of growth opportunity as its reputation for quality and service continues to develop.
