Half year trading update - 28 June 2019
28 June 2019
Costain, the smart infrastructure solutions company, today issues a trading update ahead of announcing results for the six months ended 30 June 2019 on 21 August 2019.Costain, the smart infrastructure solutions company, today issues a trading update ahead of announcing results for the six months ended 30 June 2019 on 21 August 2019.
Trading on current contracts during the first half has overall been in line with expectations. New orders secured in the first six months of this year include the A19 improvement contract and long term AMP7 awards for Severn Trent Water, United Utilities and Yorkshire Water which have strengthened the Group’s position in the water market.
However, the Group has recently seen a number of delays to the timing of contract start dates and new awards. Projects affected include the M6 Smart Motorway, Preston distributor road and HS2 Southern Section main works. Additionally, the M4 Corridor around Newport project was cancelled by the Welsh Government earlier this month. Consequently, revenue for FY2019 will be lower than previously anticipated and underlying operating profit for the full year is expected to be in the range of £38.0 million to £42.0 million.
Revenue secured to date for FY2019 is £1.1 billion with the Group’s operating divisions expected to trade within the target margin range for the year. Revenue secured for FY2020 is c£900 million (compared to c£850 million for FY2019 at the same stage last year) and is also higher margin business overall.
The Group’s order book is £4.2 billion (30 June 2018: £3.7 billion). The Group also has a preferred bidder position of c£600 million (30 June 2018: c£400 million) and tendering levels remain high.
The Group has a robust balance sheet including a strong net asset position and positive net cash, and expects to report an average month-end net cash balance for H12019 of c£65 million.
The H12019 results will include a one-off charge of £9.8 million in respect of a recent arbitration award in favour of Diamond Light Source Limited for the cost of remedial works deemed required to the roof at the National Synchrotron facility which was completed in August 2006. The sub-contractor who installed the roof would have been contractually liable for the remedial works but went into administration in November 2017. The nature of this contract is no longer within the Group’s strategy and, therefore, the underlying trading results will be reported before the impact from this one-off item. The cash cost of the award was incurred in the first half of the year.
As scheduled, Alex Vaughan, chief executive officer, will on 2 July 2019 set out in a presentation at The London Stock Exchange his ‘Leading Edge’ strategy for the business and its medium-term development.
Alex Vaughan, chief executive officer, commented:
“Despite delays to the timing of certain contract start dates and new awards, our markets are strong, as evidenced by the breadth of our new contract awards in the first half.
“We have a strong balance sheet, profitable operations and a broad range of capabilities to support the growth of the business. Costain is well placed to secure the opportunities ahead of us.”
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR).
Costain Tel: 01628 842 444
Alex Vaughan, Chief Executive Officer
Tony Bickerstaff, Chief Financial Officer
Carolyn Rich, Investor Relations Director
Sara Lipscombe, Group Communications Director
Instinctif Tel: 020 7457 2020