27th Feb 2014 13:53
LONDON (Alliance News) - Construction giant Costain Group PLC Thursday said it plans to raise GBP75.1 million in a placing and open offer of 33.4 million shares at 225 pence, as it reported a
fall in pretax profit after one-off costs of GBP18.1 million and its failed bid for rival firm May Gurney.
May Gurney was eventually snapped up Kier Group - which Thursday posted a 90% increase in half year profit - in a deal worth GBP221 million.
Maidenhead-based Costain posted pretax profit of GBP12.9 million for 2013, down from GBP27.4 million a year earlier. Adjusted pretax profit, which excludes one-off costs and impairment charges, amounted to GBP31.0 million from GBP28.1 million a year earlier.
The company's profit in infrastructure rose to GBP30.1 million from GBP22.1 million, while profit from natural resources fell to GBP9.5 million from GBP17.5 million on the back of reduced divisional revenues.
Group revenue, however, including Costain's share of joint ventures and associates, increased to GBP960.0 million from GBP934.5 million in 2012, 30% of which was derived from support services activities.
Revenue was boosted by the infrastructure division, which won a number of contracts, pushing revenue to GBP560.6 million from GBP494.9 million in 2012.
The infrastructure division, incorporates activities in the highways, rail, power and airports sectors.
However, Costain said its results were hurt by its failed bid for May Gurney. It incurred transaction costs of GBP3.7 million associated with the proposal.
Nonetheless, the firm went on to successfully acquire EPC Offshore, a specialist oil and gas project management services company, in a deal worth GBP10.6 million.
During the period, Costain completed the sale of its minority stakes in three joint venture companies to Severn Trent PLC for GBP12.0 million. Costain realised a profit of GBP9.1 million following the transaction.
Costain said its order book grew 25% to GBP3.0 billion from GBP2.4 billion in 2012, with over 90% of the order book consisting of repeat orders.
Financially, net cash fell to GBP57.7 million from GBP105.7 million. Costain said this reduction was expected given its "rapid transformation and strategic focus on major customers who utilise target cost, cost reimbursable contracts".
Despite the firm's woes, it remained upbeat and said it planned to use the proceeds of its share placing to fund an increase in bid activity in its core infrastructure, energy and water markets.
"The proposed capital raising announced today alongside these good results provides us with the opportunity to accelerate our growth in the medium and long-term in rapidly evolving markets in which it is expected that over GBP400 billion will be spent in the next 10 years," Chairman David Allvey said in a statement.
The company declared a 7% increase in the final dividend to 7.75 pence from 7.25 pence in 2012, giving a total dividend of 11.5 pence from 10.75 pence a year earlier.
The stock was trading at 270.00 pence Thursday afternoon, down 25.87 pence or 9.8%.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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