黑洞社区

Contractor Costain has reported pre-tax profit in the first half of the year down almost 80% to 拢3.1m, on falling revenue.

Revenue fell 3.2% to 拢463m in the six months to June 30, and the profit was hit by a 拢3.7m cost related to the aborted bid for rival May Gurney.

However, the contractor said that when you strip out exceptional items, such as the May Gurney bid costs and last year鈥檚 sale of PFI assets, underlying profit actually rose 3% to 拢10.7m.

The contractor also reported a 20% rise in its forward order book to 拢2.9bn, with 90% of this work representing repeat orders.

Costain chairman David Allvey, said the results represented an 鈥渆ncouraging start to the year鈥�, noting the increase in underlying profit and rising order book, but said 鈥渕arket conditions which continue to be challenging.鈥�

He added the firm remained on course to deliver a result for the year in line with the Board鈥檚 expectations.

The period saw Costain鈥檚 net cash fall to 拢64.3m, remaining in positive territory unlike many of its closest rivals.

Speaking to 黑洞社区, chief executive Andrew Wyllie said Costain had had an 鈥渆ncouraging start to the year鈥� and was benefiting from a move towards 鈥渃ost-reimbursable鈥� contracts, a more collaborative and flexible form of working, which sees a contractor paid only for the cost of its work plus an agreed margin in return for more certainty that work will continue.

Major contract wins in first half of 2013 included a place on the 拢450m AMP6 programme for Thames Water and a 拢300m Crossrail tunnelling fit-out job, which Costain will deliver as part of a joint venture with TSO and rail specialist Alstom Transport.

鈥淥ver 90% of our order book [in the first half] is on a cost-reimbursable basis,鈥� Wyllie said.

鈥淏ig customers are increasingly placing five to 10 year contracts and they have a range of requirements which change and develop and they want a collaborative partnership,鈥� he said.

鈥淲hat we are seeing is big customers who are consolidating their supply chains and wish to work with firms like Costain on a long-term basis.鈥�

Wyllie said Costain had put its unsuccessful bid for support services firm May Gurney behind it and remained ambitious and eager to grow both organically and through acquisitions.

Earlier this month, the firm paid 拢10.6m for Aberdeen-based oil and gas project manager EPC Offshore, which will be combined with Costain鈥檚 ClerkMaxwell subsidiary to create a division called Costain Upstream.

Wyllie said: 鈥淵ou should reasonably expect to see more acquisitions in the future.鈥�