We use functional cookies for a number of reasons, such as keeping the Costain website reliable and secure and to analyse how our site is being used.
Will you accept our use of non-essential cookies?

Yes No Privacy Notice

Trading update and revised date for half year results

Results for the year ended 31 December 2019


17 August 2020


Trading update 

Costain's performance has been resilient in the first half through the COVID-19 pandemic and the Company has made strong progress with its strategic objectives. All contracts are now operational with the necessary safety measures in place to protect our people. 

Overall, we expect to report an operating profit, before the A465 and Peterborough & Huntingdon contracts, of £5.7 million for the first half, with both our trading divisions, Transportation and Natural Resources, profitable despite the impact of COVID-19.

The outlook in our core infrastructure markets remains positive with high levels of activity across our teams to secure new contract opportunities. Over £2 billion of contracts and frameworks were confirmed and secured in the first half comprising a greater proportion of consultancy and digital integrated services, in line with our strategic focus. Our order book stood at £4.2 billion at the period end and, in addition, we now have over £1 billion of work on our frameworks. The order book includes £0.9 billion of secured revenue for 2021.

Following our successful £100 million capital raise in May, we have a strong balance sheet, with net cash of £140.9 million as at 30 June 2020 (2019: £40.8 million), comprising £117.8 million of cash and £85.1 million share of cash in joint operations, less £62.0 million of drawn debt. Our strengthened balance sheet allows us to capitalise on further opportunities in the growing infrastructure market.

On 6 August 2020, the Group completed the sale of its 624-berth marina concession for a cash consideration of €4.75 million. The disposal completes the Group's strategy to divest its non-core business assets in Spain. The loss on the sale of £0.6 million will be included in the income statement in the first half of the year.


Revised date for publication of half year results

Costain expects the latest arbitration decision in relation to the A465 Heads of the Valley road contract ("A465 contract") to be delivered shortly. The arbitration decision has recently been accelerated and is expected by no later than 9th September 2020. Although our view on the outcome of the arbitration is unchanged, the decision will enable Costain to more accurately report on the financial position of the contract. Accordingly, the Group will now announce its half year results on Monday 14th September, once the arbitration outcome is received.

Update on accounting treatment for the Peterborough & Huntingdon contract ("P&H contract")

As announced on 29 June 2020, agreement was reached with National Grid to cease work on the P&H contract with demobilisation of activity to take place by 31 August 2020. The termination agreement incorporates a legal process over the next 18 months to agree up to £80 million of identified compensation events, recover costs to date and eliminate a potential liability to National Grid for completing the works.

The Group has £42.0 million of P&H contract asset (i.e. work undertaken but not yet paid) as at 30 June 2020 which will increase to £49.3 million at the end of our works, to be recovered through the resolution process. As previously announced and supported by expert advice, the Group continues to believe that it has a strong entitlement to recover this sum which is subject to successful pursuit through adjudication and potentially litigation. Reflecting the revised commercial resolution process incorporated in the termination agreement and in accordance with IFRS15, there is the requirement to take a one-off charge to the 2020 interim results income statement of £49.3 million to adjust the revenue recognised on the P&H contract to the level of cash received to date. The majority of the cash impact of this charge has been incurred in the first half of 2020, with £15 million of cash out remaining in order to complete our works. 

In addition to working to resolve the issues with the A465 contract and the P&H contract, the Group has taken actions to address the type of risk arising from these contracts, including no longer pursuing Energy EPC contracts, focusing on long term investment programmes - not one off capital projects, and enhancing the strength of its overall contract management under the new Operational Excellence programme which is now in place.

Alex Vaughan, Chief Executive Officer, commented:

"I am pleased to report that the underlying trading of the Group has been profitable in the first half despite the significant challenges resulting from COVID-19. All our activities are now operational, and I would like to pay credit to our team, our partners and clients who have been outstanding in their response during the pandemic.

"We now have a strong balance sheet, over £2 billion of contracts and frameworks secured and confirmed in the period and continue to have a growing pipeline of opportunities. I am confident that we are well placed to deliver significant growth in profit in 2021."

This announcement contains inside information.

The person who arranged for the release of this announcement on behalf of the Company was Tony Bickerstaff, Chief Financial Officer.




Tel: 01628 842 444

Alex Vaughan, Chief Executive Officer 

Tony Bickerstaff, Chief Financial Officer

Carolyn Rich, Investor Relations Director

Sara Lipscombe, Group Communications Director


MHP Communications

Tel: 020 3128 8771

Tim Rowntree

Peter Hewer

Robert Collett-Creedy


Notes to Editors

Costain helps to improve people's lives with integrated, leading edge, smart infrastructure solutions across the UK's transportation, water, energy and defence markets. We help our clients improve their business performance by increasing capacity, improving customer service, safeguarding security, enhancing resilience, decarbonising and delivering increased efficiency. Our vision is to be the UK's leading smart infrastructure solutions company. We will achieve this by focusing on blue chip clients whose major spending plans are underpinned by strategic national needs, regulatory commitments, legislation or essential performance requirements. We offer our clients leading edge solutions that are digitally optimised through the following five services which cover the whole lifecycle of their assets: future-shaping strategic consultancy; consultancy and advisory; digital technology solutions; asset optimisation and complex programme delivery. Our culture and values underpin everything we do.