Interim Management Statement (6)
15 October 2009
Costain, the engineering and construction group, is issuing its Interim Management Statement covering the period from 1 July 2009 to the current date.
In August, the Group reported a strong operating result for the first half of 2009, and that it had entered the second half of the year with a record order book, robust finances and a net cash balance in excess of £100 million.
Since then, Costain has continued to perform in line with the Board's expectations.
The Group's strategy remains focused on major blue-chip customers, particularly those whose capital investment programmes are necessitated by legislation or regulation, or where projects are of high priority in the current uncertain economic environment.
The Group's quality forward order book has increased further to a new record level of £2.7 billion, up from £2.5 billion at 30 June 2009.
This increased order book follows major contract awards including:
- an extension to its current 5-year AMP4 framework
contract with United Utilities worth £170 million;
- a £297 million contract for Sellafield Ltd for the Evaporator D project extending the project from the original planning into the delivery phase; and
- Bradford Schools Phase 2 PFI, in joint venture, valued at £230 million
Costain continues to see strong levels of tendering activity, both in established sectors such as water and infrastructure, and in newer business areas such as nuclear and waste. The Group's preferred bidder position is currently in excess of £400 million reflecting recent successes in converting previous preferred positions to firm orders.
The Group has already secured revenues of over £800 million for 2010, substantially ahead of the position for 2009 at this time last year.
Following the proposals as reported in August, the Group has now completed the 90-day consultation period with staff and closed the defined benefit pension scheme to future accrual with effect from 1st October 2009.
There has been no material change in the financial status of the Group which continues to enjoy a strong cash position of well in excess of £100 million and has no significant borrowings. The average month-end cash balance in 2009 to date is running slightly ahead of the average for 2008.
The Group's ongoing strategic focus continues to provide Costain with a strong platform and the Board remains confident that the outcome for 2009 will be in line with its expectations.