24th Aug 2016 11:36
LONDON (Alliance News) - Engineering services company Costain Group PLC on Wednesday said to-date it has not been impacted by the UK's vote to leave the European Union, after both profit and revenue rose in its first half.
Costain said while it was "too early to predict longer-term outcomes" of Brexit, its focus remains on major customers who are continuing to spend billions of pounds addressing critical UK infrastructure needs. This means its business should prove resilient.
Costain said it was on course to deliver a result for the full year in line with the board's expectations, following a strong start to the year.
The company posted a pretax profit of GBP11.3 million in the six months to the end of June, up from GBP10.0 million a year earlier. Revenue rose to GBP791.4 million from GBP621.1 million, boosted by the contribution from the Rhead business it bought in August 2015. Costain said Rhead has allowed it to secure additional programme management appointments such as the River Humber pipeline for National Grid PLC.
Further strong growth within the infrastructure division as customers continued to invest in upgrading and renewing the UK's transportation networks, as well as progress in its natural resources division, also helped drive earnings higher.
Revenue from the infrastructure division was GBP613.2 million, from GBP475.2 million a year earlier and the forward order book grew to GBP2.90 billion from GBP2.70 billion. Meanwhile, within natural resources, revenue grew to GBP175.7 million from GBP145.0 million, though the division's forward order book was maintained at GBP1.00 billion.
The group said its total order book was at GBP3.90 billion at the end of June, up 5.0% year-on-year, and said more than 90% of this order book was for repeat business.
More than GBP1.40 billion of revenue had been secured for 2016 by June 30, compared to the GBP1.20 billion that had been secured for 2015 at the same point the previous year. Costain added that it also has a preferred bidder position of more than GBP400.0 million, though a year earlier this figure stood at more than GBP500.0 million.
The company said the nature of its offering has also changed "rapidly", as it has continued to push its business towards a higher proportion of consultancy and advisory work. Around 25% of its staff now working in this capacity.
Costain said it was continuing to progress a number of projects, including the redevelopment of London Bridge station which first began in 2013, as well as the Elizabeth Line Crossrail Route, which will run 73 miles across the south-east.
The company hiked its interim dividend by 15% to 4.30 pence from 3.75p.
"There is a revolution in the deployment of technology-led innovative solutions to meet the increasingly complex requirements of our national infrastructure needs, and we are continuing to rapidly transform the Costain business to be at the heart of the opportunity this presents," said Chief Executive Andrew Wyllie.
Shares in Costain were up 5.8% at 369.25 pence on Wednesday and are now trading 6.3% ahead of where they were prior to the referendum outcome. Shares dropped 20% in the week following the Brexit vote and have recovered since.
By Hannah Boland; [email protected]; @Hannaheboland
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