RHL.L Regulatory News (RHL)

Redhall Group plc

("Redhall" or the "Group")

Full Year Trading Update

Redhall Group plc (AIM: RHL), the manufacturing and specialist services group, announces a full year trading update ahead of its preliminary results for the year ended 30 September 2017.

The Group continues to pursue its growth strategy of focusing on high integrity manufacturing and services projects, which it delivers into complex, secure and hazardous environments. This strategy is resulting in a growing proportion of the Group's order book being specialist manufactured product, principally for the nuclear sector. The Group is now successfully bidding and executing contracts in all three of its nuclear markets: defence, decommissioning and new build.

The Directors' full year expectations for the Group were based around a strong second half year, driven principally by an increase in manufacturing work in Booth Industries following a period of significant engineering input and the commencement of projects for Hinkley Point C in Jordan Manufacturing.

Whilst projects for high integrity engineered products can be won on attractive margins, they can also be subject to external client delays. The Directors build timing contingencies into their project planning to allow for this but even so the Group has experienced unforeseen delays on certain nuclear and infrastructure projects which has led to work being deferred into the year ending 30 September 2018. The most significant of these relates to Jordan Manufacturing's work on Hinkley Point C, which was due to commence in the final quarter of the year ended 30 September 2017. As a result of the client changing its Preferred Bidder (our client) for its marine works, and the knock on effect this had on Jordan's contract, the Directors now anticipate that the contract will commence during October 2017 and will complete within the year ending 30 September 2018.

The late timing of the delays, to this and other projects, are disappointing and will mean that the Group's results for the year ended 30 September 2017 will be materially below expectations.

The Directors do not expect these delays to continue and remain confident of a strong performance from Jordan Manufacturing in 2018. The Directors are also pleased that Booth Industries has continued to make good progress implementing engineering and manufacturing improvements. Redhall Jex has benefited from the previously announced large contract award from one of its major clients which, with increased scope, has run into the current year. Redhall Networks continues to perform well, meeting expectations in a buoyant market.

The Group's RBC Fabrications business, which operated in the offshore oil and gas market, was mothballed in 2015 and only a small element trading as Chieftain Fabrications remained. Its market remains difficult and products supplied by Chieftain can be manufactured more efficiently elsewhere in the Group. As a result, the decision has been taken to close this part of the business.

Outlook

The Directors continue to be encouraged by the high level of pipeline opportunities in the Group's chosen markets within high integrity manufacturing and are confident the Group will continue to deliver against its strategic objectives in those markets. Consequently, after taking account of the closure of the remaining business within RBC, the Directors expect that Group profitability for the year ending 30 September 2018 will remain in line with market expectations.

The Group's results for the year ended 30 September 2017 are expected to be announced in early December 2017.

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