Redstone

Bombed-out IT and telecoms equipment provider Redstone has rebounded after being chosen for a lucrative schools contract.

Although it has recently specialised in laying down communications and IT infrastructure for large retail developments – such as London’s Westfield and Leicester’s Highcross shopping centres – the announcement that Redstone’s consortium had been chosen as preferred bidder for the Birmingham Building Schools for the Future (BSF) project lifted the shares from their recent 6p nadir. The contract, when it is sealed in May, should deliver a total of £150m of sales to Redstone over 15 years.

Having overly relied on new retail developments for growth, the slowdown in that sector means many contracts were deferred or cancelled, and Redstone’s revenues are predicted to fall from 2008’s £200.7m to nearer £165m in the year to March 2009.

The BSF project, however, demonstrates the group’s ability to diversify into new areas. CEO Martin Balaam says Redstone has made it onto shortlists of two and three for BSF projects in Salford and Blackburn respectively, adding that it will continue the recent strategy of making three such bids each year.

Another new niche is 'fibre to the home', where a first major project could be to provide its ‘solution’ for the 185-acre, Titanic Quarter regeneration scheme in Belfast. The contract, which Balaam says he expects to close ‘in weeks’, would involve the installation of the entire internet network for the development, allowing the developer to charge carriers for access and Redstone to potentially add a long-term managed service contract.

Down from a five-year peak of 102.5p in 2007, Redstone's shares could recover further on positive newsflow but are not for widows or orphans.

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