13th Mar 2007 07:02
Costain Group PLC13 March 2007 Costain Group PLC("Costain" or the "Group") Preliminary results for the year ended 31 December 2006 Costain, the construction and property development group, announces results forthe year ended 31 December 2006 and an update on the implementation of itsstrategy for profitable growth FINANCIAL SUMMARY • These results reflect the impact of previously announced contract write-downs and the closure of the Group's International division • Revenue of £886.3m (2005: £773.2m) • Strong performances from Civil Engineering and Property divisions impacted by underperformance of Building and COGAP divisions, resulting in underlying profit* of £12.8m • Previously announced management actions including taking provisions, as advised last year, in respect of contract write-downs and closure of International division, resulted in a loss before tax of £61.7m (2005: profit before tax of £25.0m) • Net cash of £53.3m (2005: £74.0m) * loss before tax of £61.7m before result of International division (loss of £27.3m) and before provisions in respect of contract write-downs (£47.2m) STRATEGY IMPLEMENTATION REVIEW • 'Being Number One' strategy has refocused management on key disciplines and driving the business forward • Market strengths and opportunities examined in detail confirming focus on key target sectors • Management team restructured giving direct reporting lines and clear responsibilities • Programme of efficiency improvements, with overhead, supply chain and cost reduction initiatives in place TRADING UPDATE • Forward order book reflecting high-quality contracts • Major contract awards since year end including Lewisham 'Building Schools for the Future' and Embankment tube station Commenting, the Chairman, David Jefferies, said: "Costain is in a much stronger position as a result of the management actionstaken during the year. With a greater focus on establishing market leadingpositions in our target sectors, we are seeing significant benefits accruingfrom the implementation of the 'Being Number One' strategy. "Looking to 2007, and following the contract write-downs, we have entered theyear with greater clarity. We are tightly managing out the few remaining legacycontracts and, having reviewed the Group's trading prospects in detail, theBoard believes that the Group should see a significant recovery in underlyingperformance this year." 13 March 2007 ENQUIRIES:Costain Group PLC Tel: 01628 842 444Andrew Wyllie, Chief ExecutiveTony Bickerstaff, Finance DirectorGraham Read, Public Relations College Hill Tel: 020 7457 2020Mark GarrawayMatthew Gregorowski CHAIRMAN'S STATEMENT The last year saw a great deal of activity across the Group. The primary focusof the new management team, led by Andrew Wyllie, was the implementation of the'Being Number One' strategy for the future development of Costain. This hasintroduced a significantly greater emphasis on the Group's operatingefficiencies and on deploying resources only in those areas where we believe wecan maintain or build leading market positions. Consequently, as we announced in June 2006, we took the decision to close theInternational division. This announcement included an initial write-down of £18million in respect of closure costs and contract write-downs and a furthercontract write-down of £6 million as announced in December. Costain will nowtender for and deliver any future overseas contracts through its specialistdivisions. The Building division was another area of focus where, following a regularbusiness review, we announced last September that we would take an £11.9 millionwrite-down in view of increased uncertainty around the recovery of a number ofcontract claims. The division's management team has been substantiallyrestructured and a new Managing Director has been appointed. We also took steps to ensure a much needed improved performance at COGAP, ouroil & gas division. Whilst we continue to monitor progress closely, and theBoard is reviewing a range of options in respect of this division, COGAP isbenefiting from a number of recent contract awards which should lead to animprovement in performance in line with the management's expectations. As announced in December, and as part of the implementation of our strategy, themanagement team completed a comprehensive review of the Group's contract bookincluding an assessment of disputed contracts and claims previously taken tovalue. The review identified that a project in Mexico, where COGAP is a sub-contractor,had suffered cost over-runs and it also identified that the Building divisionhad continued to under-perform during the second half of the year. Additionally, at that time, an examination of recent developments regarding anumber of contracts currently subject to dispute, combined with a review ofrecent claim recovery history, led the Board to conclude that where recovery wasnow no longer probable, or the outcome could no longer be measured reliably, itwas appropriate to write-down a significant amount of the disputed contractvalues. As a result the Board determined that a further £36 million provisionin respect of these disputed contracts would be made in the accounts for theyear ended 31 December 2006. Whilst these write-downs have been taken in the 2006 accounts, I must stressthat we will continue to vigorously pursue our entitlements on those contractssubject to dispute. We also implemented a broad range of actions to strengthen the underlyingperformance of our operations including restructuring the Group's ExecutiveBoard which has been reduced in size. This will ensure direct reporting linesas well as providing clear oversight of our activities in each of our targetmarkets. It is important to note that the review announced in December also confirmed theunderlying strength of our Civil Engineering and Property divisions. In Civil Engineering, which accounts for some 80% of the forward order book, weare focused on further building on, or developing, market leading positions infive specialist sectors including water, highways, rail, marine and nuclear.Nuclear is a new development for Costain but in a short period we have alreadysecured contracts in what is estimated to be a £30 billion market. Our Alcaidesa Property division, which is based in Spain, continues to performwell benefiting from the continuing strong demand for holiday developments alongthe Spanish coast. With these strongly performing divisions, and the benefits coming through fromthe decisive management actions taken during the year, the Board is confidentthat it has strengthened the platform on which to deliver its stated strategy. Results Revenue for the year (including Group's share of joint ventures and associates)was £886.3million (2005: £773.2million). Strong performances from the Civil Engineering and Property divisions wereimpacted by the underperformance of the Building and COGAP divisions, resultingin an underlying profit of £12.8 million. In June, the decision was made to close the International division and provisionmade for closure costs and irrecoverable costs and investments. Provisions werealso taken in the division where events in the year have resulted in thewrite-down of claims recovery and the immediate recognition of certain forecastcontract losses. The resulting loss from operations in the Internationaldivision including these provisions was £27.3 million. In addition, developments during the year regarding a number of contracts hasresulted in the need to take substantial write-downs against the anticipatedvalue to be received on these contracts. As a result value has been writtendown and costs incurred that are not probable of being recovered totalling £47.2million. Loss before tax for the year ended 31 December 2006 was £61.7 million (2005:Profit £25.0 million). Loss after tax was £54.0 million (2005: £23.6 million profit). Loss per sharewas 15.1p (2005: earnings of 5.67p). At the year-end, the forward order book was £1.8 billion (2005: £1.9 billion),of which £725 million relates to 2007 and of which 72% is repeat order business. The Group has no significant borrowings and net cash balances at the full-yeartotalled £53.3 million (2005: £74.0 million), including the Group's share ofcash held by joint arrangements (construction joint ventures) of £22.0 million(2005: £25.0 million). The evolving profile of the business as indicated at thehalf year, into framework / partnered client relationships will result in a moreevenly balanced cash flow profile going forward. Covenants As reported in the Company's announcement on 18 December 2006, the charge to theProfit & Loss Account, arising from the provisions taken, were expected topotentially result in the Group being in breach of certain of its bankingcovenants. Following discussions with the Group's bankers, we are pleased toadvise that we have agreed all necessary waivers and adjustments for thefacilities through to June 2008. Pensions The Group's pension deficit as at 31 December 2006 was £48.1 million net ofdeferred tax, a reduction of 31% from 31 December 2005. This is derived fromthe Group's most recent actuarial review and reflects market conditions on thatdate. Dividend The Board remains wholly committed to the resumption of dividend payments but,in light of the impact of the provisions taken during the period, it hasconcluded that it is not currently in a position to recommend a dividend. Board In June 2006, Tony Bickerstaff joined the Board as Finance Director. Tony hasconsiderable experience both in the industry and the finance arena and he isalready making a significant contribution both on the Board and across thebusiness. On 25 January 2007, Dato' Ahmad Pardas Senin, a nominee of UEM Builders Berhadand Deputy Chairman of the Group, stepped down from the Board. We weredelighted to welcome Mohd Hussein Bin Abdul Hamid, a nominee of UEM BuildersBerhad, to the Board. Outlook Costain is in a much stronger position as a result of the management actionstaken during the year. With a greater focus on establishing market leadingpositions in our target sectors, we are seeing significant benefits accruingfrom the implementation of the 'Being Number One' strategy. Looking to 2007, and following the contract write-downs, we have entered theyear with greater clarity. We are tightly managing out the few remaining legacycontracts and, having reviewed the Group's trading prospects in detail, theBoard believes that the Group should see a significant recovery in underlyingperformance this year. David G JefferiesChairman CHIEF EXECUTIVE'S REVIEW My focus over the last year has been the implementation of our 'Being NumberOne' strategy, which is about striving for leadership through focus andexcellence. This has necessitated taking a number of hard decisions andexecuting robust management actions. We now have a solid platform to take the business forward. Strategic Update Costain consists of two principal activities: Construction, based in the UK, andproperty development in Spain. We are investing in both of these businesses inorder to grow them against an appropriate set of clear criteria. To maximise profitability in Construction, our strategy is focused on targetinglarge "blue chip" customers. Without exception, the trend with all of thesesophisticated customers is to work in longer-term framework or partnershiprelationships with fewer contractors, providing the potential for sustainableprofit streams. These customers are also increasingly looking for an integratedwhole life-cycle service offering from their contractors. These trends areexpected to accelerate. The outcome of this procurement approach is that the construction market israpidly polarising towards a small number of large contractors who have thescale and resources to secure the increasingly large frameworks, and a smallernumber of specialist sub-contractors and regional players. Our strategy is aimedat developing Costain into one of the large prime contractors and partners ofchoice in all of our target sectors. It is therefore critical in each of our chosen markets that we are a competitiveleading player with a demonstrable track record to deliver such a service. Toachieve this objective we need to focus our resources in the market sectorswhere we have or can achieve consistently strong positions. Costain already holds such a position in the water and highways sectors throughthe Asset Management Programme (AMP4) frameworks and major schemes beingundertaken for the Highways Agency. Our aim is to develop similarly strongpositions in each of the remaining sectors we have currently selected followingdetailed market research and analysis: rail, retail, health, education, nuclear,marine, and oil & gas. Our competitive advantage is generated through an industry-leading technicalcapability combined with a demonstrable emphasis on meeting customer needs. Thecompany will capitalise on those skills so that we are seen as Number One in theareas of construction and asset management where customers especially valuethese services. Customer demand is also requiring us to add a maintenance andoperations capability to our product offering and initially we will be doingthis in the water and highways markets. This will ensure that we can meet ourcustomers developing needs for a single provider of value for money "wholelife-cycle" services. Markets We believe that our target markets provide a good balance between public andprivate sector customers with the former relatively unaffected by the impact ofhigher interest rates. We have intentionally chosen our target sectors mindfulof the need to focus the business to develop strong positions in attractivemarkets without spreading our resources too thinly. There are good opportunitiesin all of our target sectors. PFI, or related financing vehicles, will continue to be an increasinglyimportant mode of procurement for our public sector customers. Our PFI effortswill be focused in the health, education and highways markets where we willcontinue to grow our equity portfolio. Against a backdrop of a very buoyantsecondary market, we will continue to dispose of selected equity stakes in order to realise profit and generate cash for reinvestment in future PFI schemes. Following the closure of the International Division, future internationalopportunities will be pursued utilising our sector-focused capabilities. We will continue to expand our property development activities in Spain inconjunction with our partner Banesto Bank under the Alcaidesa brand. Activitieswill focus on the next phase of the original Alcaidesa site, two locations inGranada and the marina development at La Linea. The funds necessary for thisexpansion will be generated by sales from the existing portfolio or bank lendingon a non-recourse into the joint venture vehicle. The strategy for oil and gas through COGAP has been changed so that there ismuch greater focus on front-end design and the provision of project managementservices. This will deliver a lower risk, profitable business. Safety, Health & Environment ("SHE") We have a "zero tolerance" attitude towards accidents. The effective managementof Health and Safety will always be a key priority. The implementation of our safety systems and processes is now being explicitlymeasured to highlight excellent performance and to identify areas forimprovement, in particular overseas which is an area where we can significantlyimprove on our record. In 2006, challenging SHE targets were set and new initiatives developed to driveforward continued improvements to our procedures and processes. The initiativesincluded programmes for Behavioural Safety, the Management of Road Risk andOccupational Health & Employee Wellbeing which will be rolled-out across thebusiness during 2007. Given the importance of this area, Costain will issueshortly its first Corporate Responsibility Review. Costain's UK Health & Safety performance and consideration for the localcommunity were recognised by the achievement of no less that 34 RoSPA Awards andseven awards from the Considerate Constructors Scheme. During the year, werejoined the Major Contractors Group to ensure that we can share in bestpractice. The "Save It" campaign, aimed at reducing waste through improved material andresources management, recycling and reuse of material, has continued. A "SaveIt" DVD was produced and launched at an official ceremony in London in Junewhich members of the media attended along with key personnel from within theconstruction industry. During 2006, the monitoring of waste was extended toinclude offices which are now required to provide data on energy, water andpaper consumption as well as the amount of waste being produced. People Our success is dependent on having the very best team of people, properlytrained and motivated, who are rewarded and recognised for their efforts. Costain now has an Executive Board Director responsible for Human Resources. Our people management and development processes are being upgraded to meet thechallenges of a competitive market for talented people. Examples include theintroduction of an executive development programme, staff engagement survey,annual performance awards, training for front line supervisors together withgraduate and project management forums to support structured middle and seniormanagement development. Recruitment policies have been updated, the team strengthened and majorimprovements made in responses to job applicants. Direct recruitment continuesto be very successful. Working with the Construction Industry Training Board,Costain is driving skills development within the industry and continuing tobuild on its Building Awareness initiative. New initiatives focusing onGraduate Development, Executive Development and High Potential programmes havebeen introduced. Senior promotions have already resulted from these actions. The Company was shortlisted for the Best Places to Work in Construction Awards2006 and a staff engagement survey underlined the commitment of staff. Whilstconfirming many of the Group's strengths, the survey also identified a number ofchallenges and action plans to address these have been put in place. The Executive Board has been reduced in size and restructured. Seniorexecutives now have clear responsibility to grow our business and deliver profitin each of our target markets. In some areas this represents a change inapproach, most significantly in the Building division where we have moved awayfrom five relatively autonomous regional business units to a single operationstructured around our key customers. Supply Chain In order to improve profitability it is essential that we also work with fewersupply partners in a more strategic long-term relationship. In 2006, we launchedthe Partners for Progress alliance with three M&E providers in the Buildingdivision and similar alliances are being developed for the big spend elements. There remains a lot of work to do to achieve our objectives in this area andprogress needs to be accelerated. We are acutely aware that the number ofreliable sub-contractors is reducing due to market consolidation and we musttherefore make Costain an attractive proposition to our suppliers. Overheads New procedures have been put in place to actively manage the overheads, whichare largely driven by people, bid and office costs. We continue to review the most effective utilisation of office space and lastyear closed our Liverpool, Dubai and Pretoria offices. Summary We have had to take robust management action to address a number of fundamentalissues and we will continue to take such action when necessary. Consequently,Costain is in a much stronger position to meet the demands of an increasinglycompetitive marketplace. We are confident we will see a significant recovery inthe Group's performance this year and our absolute focus on key sectors isproviding a platform for longer-term profitable growth. I look forward to reporting on future progress. Andrew WyllieChief Executive OPERATIONAL REVIEW Civil Engineering The division recorded a profit of £10.3 million (2005: £16.0 million) on revenueof £488.1 million (2005: £329.8 million) including the £7.7 million impact ofwrite-downs as a result of significant developments in the year on the recoveryof values related to historic contracts. The strong growth in revenue reflects Costain's leading positions in key civilengineering markets. Water 2006 saw a consolidation of Costain's position as a leading contractor to the UKwater sector with a firm focus on performance and delivery. All Costain's AMP3 framework customers have now been retained for the AMP4period. These customers - Southern Water, Thames Water, United Utilities,Wessex Water and Yorkshire Water - have continued the Costain relationship butwith both increased scope and value. In addition, two more water frameworkclients, Bristol Water and Welsh Water, have been added. This broad-basedportfolio provides a stable platform of work and opportunities through to 2010. Within our Southern Water Framework, where we are working in joint venture withUnited Utilities and Montgomery Watson Harza, we achieved all of our AMP4 YearOne targets. In addition to delivery on cost, time and our quality obligations,our Health and Safety record was recognised by a RoSPA Gold Award to the JointVenture in its first year of trading. Costain has continued to deliver against a demanding schedule for Southern Waterand now has the majority of schemes designed and is on site at over half of the240 schemes. We are on target to deliver all of the time/cost/qualityrequirements. In addition, in a separate joint venture with Black and Veatch,Costain is on schedule to commission in 2007 a major new £75 million waste watertreatment plant at Margate. Our successful partnership with Southern Water has been recognised with twoNational Awards; the BCIA Best Practice Award for the £15 million Lewes Old TownFlooding Scheme and the Utilities IT Award for our Programme Management Systems. The £100m Perry Oaks/Iver South Scheme for BAA and Thames Water was handed overon time. This project, which included substantial additional works, met allBAA's requirements for the nearby Terminal 5 at Heathrow. Our Thames Water Framework team was awarded the £36 million Hornsey WTW and,also with Thames, we provided early contractor involvement for a number ofsignificant major projects in advance of a final decision to proceed toprocurement and award. Elsewhere, frameworks for United Utilities, Welsh Water and Yorkshire Water arecontinuing to deliver to programme and meet all of the AMP4 requirements. Wehave started the drive to win AMP5 work which will commence in 2010.Additionally, our 25 year Aquatrine PFI contract for the MoD, where we are injoint venture with Severn Trent, continues to deliver water and waste waterservices to some 1,500 sites. Highways Early Contractor Involvement ("ECI") schemes for the Highways Agencysuccessfully proceeded to the construction phase. These included the £120million A2/A282 at Dartford and the £75 million M25 Holmesdale TunnelRefurbishment projects. The largest single investment by a local authority in highways, the £90 millionPorth Relief Road, was opened as planned in December to the immense satisfactionof the client and stakeholders alike. Costain is also involved with ECI schemes such as the £370 million M1 Widening(Junctions 10 to 13), the £30 million A34 Wolvercote Viaduct, the £52 millionM25 Rapid Widening (Junctions 1b to 3) and the £20 million A40 scheme awarded bythe Welsh Assembly. The Company's position as a leader in the Highways sector was underlined byachieving one of the industry's leading scores in the Highways Agency'sCapability Assessment Toolkit, enabling continued success in pre-qualificationfor Highways Agency opportunities. Our Highways sector strategy is now focused on diversifying our service deliveryto include maintenance and framework schemes supporting our aim of being thefirst choice for clients. Rail Costain began 2006 with two of the most prestigious projects in the sector. Theaward winning St Pancras Station Redevelopment, part of the Channel Tunnel RailLink, and the Hammersmith and City Line Station at White City, with itstechnically demanding bridge slide, achieved considerable profile and praise. More success has been achieved during the year. In London new work was securedunderground, for both London Underground Limited ("LUL"), Metronet and TubeLines, and overground for Docklands Light Railway (DLR). In London, further significant bidding opportunities are being pursued with DLR,Network Rail, LUL, Metronet, Tube Lines and developers. Prospects for 2007 werefurther strengthened with the award by Metronet in February 2007 of a £30million contract for the refurbishment of Embankment tube station. Nuclear The Nuclear sector presents a potential market opportunity of £30 billion overthe next 30 years. Under the guidance of the Nuclear Decommissioning Authority(NDA) which came into force in April 2005, the market has been reinvigoratedwith significant restructuring and contract placement as the NDA drivesefficiency targets. We are developing our track record and resource base tomeet these opportunities. Significant among contract awards in 2006 were the Sellafield additionalEvaporator D contract at £90 million, which commenced its Front End EngineeringDesign phase in September, and a feasibility study for the application of plasmatechnology to reduce in size and stabilise intermediate-level wet waste. Thisplasma technology should generate construction opportunities of approximately£350 million while also providing equivalent "whole life" cost savings to thecustomer via the size reduction impact on future storage requirements. The £5 million Hunterston Modular Active Effluent Treatment Plant wassuccessfully assembled and commissioned off-site and is currently completingon-site installation. Work also continues on existing contracts at UKAEA Winfrith Dragon 1 Deplantingcontract, BNG Magnox Trawsfynydd Strategic Integrated Framework and AWEAldermaston and Burghfield. Marine Costain successfully completed two challenging coastal defence contracts inWithernsea (for Yorkshire Council) and at Whitstable (for Canterbury CityCouncil) in 2006. The Whitstable Coastal Works project, involving theconstruction of new groynes and 80,000m3 beach replenishment over a 2kmworkfront, was opened in October by Ian Pearson, the Minister of State forClimate Change and Environment. Costain has secured pre-qualification status ona number of beach replenishment and rock armour contracts as a result of thequality of work at Whitstable. These projects will be tendered during 2007. Costain continued working with Hutchison Ports on the construction of an upgradeto their Container Port at Thamesport on the Medway River. Costain was awarded the £17 million St. Germans Pumping Station project, nearWisbech in Cambridgeshire, by the Middle Level Commissioners. Despite delays, it is expected that major developments at Felixstowe SouthReconfiguration (Hutchison Ports) and London Gateway Port (Dubai Ports World)will go ahead and we are in tender negotiations to secure a share of theseopportunities. Building The division recorded a loss of £25.9 million (2005: £4.3 million profit) onrevenue of £298.0 million (2005: £321.6 million) including the £25 millionimpact of contract write-downs (see Note 3 in the Notes to the Accounts). The Building division continued to underperform during the year and actions havebeen taken to improve performance and position the division as a leading playerin its sector. These ongoing actions include appointing new management,restructuring the business around customer rather than geographic lines,reducing overheads, rationalising the supply chain, being more selective aboutwork tendered for and improving business processes including training anddeveloping our management teams. As part of its planned Public Finance Initiative ("PFI") reinvestment strategy,the Group's remaining shareholding in the Kings College Hospital PFI Project wassold during the year realising a profit of £3.6 million and, in January 2007,the Group sold its shareholding in the Bridgend Prison PFI project, realising aprofit of £2.7 million. Retail Following the success of delivering six Tesco projects in 2006, mainly in theSouth East, we have now extended our operations more widely across the southernhalf of the country. We now have a focused strategy and a core team for Tescowhich enables us to respond to larger, complex projects including mixed use anddistribution. A number of opportunities are at bid stage and we have a strongpipeline of opportunities. In Enfield, we completed a development for ING Real Estate Development on timeand within budget. This £33 million project comprises 21,000 sq ft of retailand leisure space, a 520 space car park and a new road system. Costain oversawthe management and co-ordination of the retail fit out companies to ensuretrading started in October, in time for the important Christmas period. Health A number of healthcare projects were successfully completed including sixfacilities in Shropshire built for Shropshire County Council under the PrivateFinance Initiative. The facilities provide day-care facilities for the elderly,disabled and people with learning disabilities. All six buildings were handedover to the client between April and September 2006. Planning continued in 2006 with the three NHS Trusts involved in the 3 Shiresbatched PFI projects. The three projects are expected to reach their separatefinancial closures in the first half of 2007 when construction is anticipated tobegin. New work secured during the year includes projects at Cheltenham GeneralHospital, St Peter's Hospital (Chertsey), Shelton Hospital (Shrewsbury) andfurther developments at Sheffield Children's Hospital. The Kingston PFI hospital project has suffered delays and cost overruns and isdue for completion in the first half of 2007. Education In joint venture partnership with Amey - Ferrovial, Costain achieved financialclose on the £84 million first phase of the Bradford Building Schools for theFuture ("BSF") programme. Exclusive negotiations are now underway on the nextphase valued at approximately £120 million. The total programme for Bradford,which is one of the early pathfinder BSF schemes, is valued at over £400million.Elsewhere in the BSF programme, Costain in partnership with VT Group as "Learning21", has been appointed as preferred bidder for the Lewisham BSF scheme. Elsewhere, during the year, construction of five secondary schools as part ofthe Kent and Ealing grouped PFIs and a new City Academy for John Madejski inReading all progressed. Featherstone Primary School was delivered on time in thesummer of 2006. Oil & Gas The division recorded a loss of £19.5 million (2005: loss of £1.0 million) onrevenue of £57.2 million (2005: £52.1 million) including the £14.5 millionimpact of contract write-downs (see Note 3 in the Notes to the Accounts). The division has continued to underperform. It was decided to bring a greaterdegree of focus to the operations and the business is concentrated on nicheareas within the oil & gas sector where Costain can achieve a stronger marketposition and establish a platform from which to grow. The division's futureperformance will be closely monitored and further decisive actions taken asrequired. The nitrogen rejection plant project for Pemex in Mexico, where Costain is asub-contractor, suffered cost over-runs. Construction is now well advanced andthe plant will be completed in the latter half of 2007. Costain is incommercial discussions with the main contractor. In UK oil & gas, the Volatile Organic Compounds project (VOC) forConocoPhillips, Teesside passed the 70% completion mark on schedule and withinbudget. New projects awarded include the front-end engineering design of theIneos Stublach underground gas storage facility. Several other such facilitiesare planned around the UK. Costain was awarded a £6 million contract by Eni Pakistan Limited for theprovision of engineering, procurement and construction management supportservices over a three-year period. In the Middle East, our operation in AbuDhabi secured the $51 million Storex contract from ADMA OPCO, a repeat ordercustomer. The work involves the completion of a number of small packages over afour-year period. Property Development - Alcaidesa The division recorded a profit after tax of £3.9 million (2005: £14.0 million)on revenue of £13.2 million (2005: £45.0 million). The profit reported in 2005reflected adjustments to revenue and profits which came about through timingdifferences in adopting IFRS. The Group's Spanish property development business, Alcaidesa Holding S.A., inwhich Costain holds a 50% interest, continues to perform well and achieved salesduring the year of seven serviced development land enclaves, totalling 18.77hectares, for residential development schemes. The second Alcaidesa golf course has been completed and will open for play inSummer 2007 along with the new Clubhouse which is progressing to plan. In conjunction with its local joint venture partner, Alcaidesa Holding S.A.added to its existing land bank in Salobrena, near Granada, by purchasingfurther adjoining developable land of some seven hectares. Provisional revisedplanning designation has now been secured and we expect to complete definitiveresidential and commercial planning approvals during 2007. Negotiations continue on a potential marina development in La Linea, immediatelyadjacent to Gibraltar. The Spanish operations continue to use their own financial resources to fundinfrastructure and land purchase investments on a non-recourse basis. International The division recorded a loss of £27.3 million (2005: £2.9 million) on revenue of£29.8 million (2005: £24.7 million) including the £25.4 million impact ofclosure costs and contract write-downs (see Note 3 in the Notes to theAccounts). In line with the Group's strategy of deploying resources only in those areaswhere it believes it can maintain and or build leading market positions, thedecision was taken during the year to close the International division and anumber of offices. Costain will now tender for and deliver any future overseascontracts through its specialist divisions. Existing contracts are being worked through to completion and appropriateprovisions have been taken where necessary. These include the Costa Azulbreakwater project in Mexico which is a complex project that is targeted forcompletion on schedule at the end of this year. It should be noted, however,that given the nature of this project, should there be a delay, the financialpenalties could be significant. We are taking a number of actions to mitigatethis risk and have also deployed a very experienced and well-resourced team towork, in conjunction with our joint venture partners, China Harbour Engineering& Construction, on delivery of the project. Following the closure of the International division, the Group has also sold allof its trading activities in Nigeria including the minority interest in Costain(West Africa) PLC, a company listed on the Lagos Stock Exchange. Thisrepresents a complete exit from the country. Following the completion of a number of projects, the Group completed the safewithdrawal of all of its staff from the Kurdish region of Iraq. FINANCIAL REVIEW Results Loss before tax for the year ended 31 December 2006 was £61.7 million (2005:Profit £25.0million) on revenue (including Group's share of joint ventures andassociates) up 15% compared to 2005 at £886.3 million. During the year several key decisions were taken regarding the activities of theGroup that have impacted considerably on the financial results for the year. InJune, the decision was made to close the International division and provisionmade for closure costs and irrecoverable costs and investments. Provisions werealso taken in the division where events in the year have resulted in thewrite-down of claims recovery and the immediate recognition of certain forecastcontract losses. The resulting loss from operations in the Internationaldivision including these provisions was £27.3 million. In addition, developments during the year regarding a number of contracts hasresulted in the need to take substantial write-downs against the anticipatedvalue to be received on these contracts. As a result value has been writtendown and costs incurred that are not probable of being recovered totalling £47.2million. The underlying profit (being the loss before tax, before the result of theInternational division and before contract write-downs) for the year ended 31December 2006 was £12.8 million. Net interest receivable amounted to £2.8 million (2005: £0.6 million payable). Basic loss per share amounts to 15.1p (2005: 6.7p earnings per share). Cash Flow and Borrowings The net cash position of £53.3 million (2005: £74.0 million) includes £3.1million of borrowings (2005: £1.2 million). The cash position is affected by monthly and contract specific cycles, in orderto accommodate these flows the Group maintains a range of bank facilities. Thecontinuing change in the profile of the business will result in a more evenlybalanced cash flow profile going forward. Order Book The order book reduced slightly during the year from the record level last yearend to £1.8 billion (2005: £1.9 billion), of which 79% is in the CivilEngineering activities. Shareholders' Funds As a result of the loss for the year, the negative shareholder equity positionhas been increased to £55.2 million (2005: £22.5 million negative). Thisincludes the impact of the deficit, net of deferred tax, in the pension schemeof £48.1 million (2005: £69.5 million deficit). Treasury Controls Policy The Group's treasury and funding activities are undertaken by a centralisedtreasury function, its primary activities are to manage the Group's liquidity,funding and financial risk, principally arising from movements in interest ratesand foreign currency exchange rates. The Group's policy is to ensure thatadequate liquidity and financial resource are available to support the Group'sgrowth development, while managing these risks. The Group's policy is not toengage in speculative transactions. Group Treasury operates as a service centrewithin clearly defined objectives and controls and is subject to periodic reviewby internal audit. Foreign Currency Exposure Translation Exposure: the results of the Group's overseas activities aretranslated into sterling using the cumulative average exchange rates for theperiod concerned. The balance sheets of overseas subsidiaries are translated atclosing exchange rates. Transaction Exposure: the Group has transactional currency exposure arising fromsubsidiaries' commercial activities overseas in currencies other than thesubsidiaries' operating currencies. In such circumstances, the Group requiresits subsidiaries to use forward currency contracts to minimise the currencyexposure unless a natural hedge exists elsewhere within the Group. Interest Rate Risks and Exposure The Group holds financial instruments for two main purposes: to finance itsoperations and to manage the interest rate and currency risks arising from itsoperations and its sources of finance. Various financial instruments (forexample, trade debtors, trade creditors, accruals and prepayments) arisedirectly from the Group's operations. The Group finances its operations througha mixture of working capital and bank borrowings. With the Group's low level ofborrowings, the main exposure to interest rate fluctuations arises from surpluscash, which is generally deposited with one of the Group's relationship banks. Liquidity Risk Group policy is to ensure that projected financing needs are supported byadequate committed facilities. The Group renegotiated borrowing facilities with its relationship banks to amaturity dated of 30 June 2008. In addition to its borrowing facilities, theGroup has extended its contract bonding facilities with its relationship banksand surety companies, all of which facilities will now subsist until 30 June2008. As a result of the loss for the year the Group has renegotiated all financialcovenants within its facilities with its relationship banks and suretycompanies. These have all been reset through to June 2008. Going Concern The Directors believe, after due and careful enquiry, that the Group hassufficient resources for its present requirements and, therefore, consider itappropriate to adopt the going concern basis in preparing the 2006 financialstatements. Consolidated income statement Year ended 31 December Notes 2006 2005 £m £m Revenue (Group and share of joint ventures and associates) 2 886.3 773.2Share of joint ventures and associates 7 (137.9) (95.1)Group revenue 748.4 678.1 Cost of sales (785.9) (650.7)Gross (loss) / profit (37.5) 27.4 Administrative expenses (20.9) (18.7) Group operating (loss) / profit (58.4) 8.7 Profit on sale of investment 3.6 -Profit on sale of interest in joint venture - 3.5Amounts written off loans to associate (2.7) -Share of results of joint ventures and associates 7 (7.0) 13.4 (Loss) / profit from operations 3 (64.5) 25.6 Finance income 4 26.7 23.5Finance costs 4 (23.9) (24.1)Net financing income / (costs) 2.8 (0.6) (Loss) / profit before tax (61.7) 25.0 Income tax credit / (expense) 6 7.7 (1.4) (Loss) / profit for the period attributable to equity holders of 2 (54.0) 23.6the parent Earnings per share - basic 5 (15.1)p 6.7pEarnings per share - diluted 5 (15.1)p 6.5p During the year and the previous year, no businesses were acquired or disposedand therefore all results arise from continuing operations. Consolidated statement of recognised income and expense Year ended 31 December Notes 2006 2005 £m £m Exchange differences on translation of foreign operations - (0.9)Cash flow hedges: Effective portion of changes in fair value (net of tax) 0.3 (0.6)during period - Group Effective portion of changes in fair value (net of tax) 3.1 (2.7)during period - joint ventures and associatesChange in fair value of assets classified as available for (0.8) 3.4saleActuarial gains on defined benefit pension schemes 26.0 0.2Tax recognised on actuarial gains recognised directly in (7.8) -equityNet income / (expense) recognised directly in equity 20.8 (0.6) (Loss) / profit for the period (54.0) 23.6 Total recognised income and expense for the period 9 (33.2) 23.0 Attributable to:Equity holders of the parent (33.2) 23.1Minority interests - (0.1) (33.2) 23.0 Consolidated balance sheet As at 31 December Notes 2006 2005 £m £mASSETSNon-current assetsProperty, plant & equipment 5.7 5.9Intangible assets 3.4 3.5Investments in joint ventures 25.0 27.6Investments in associates 1.2 0.2Loans to joint ventures 3.3 0.2Loans to associates 2.0 3.0Other investments 3.6 4.4Other debtors 10.1 10.2Deferred tax assets 30.6 31.1Total non-current assets 84.9 86.1 Current assetsInventories 2.4 2.0Trade and other receivables 160.6 166.5Cash and cash equivalents 8 56.4 75.2Total current assets 219.4 243.7Total assets 304.3 329.8 EQUITYShare capital 17.9 17.8Share premium 0.6 0.4Special reserve 12.8 13.1Fair value reserve 2.6 3.4Foreign currency translation reserve (1.2) (1.2)Hedging reserve (1.6) (5.0)Retained earnings (86.3) (51.0)Total equity attributable to equity holders of the parent (55.2) (22.5)Minority interests - -Total equity 9 (55.2) (22.5) LIABILITIESNon-current liabilitiesInterest bearing loans and borrowings - 0.2Retirement benefit obligations 68.7 99.3Other payables 6.6 7.2Provisions 4.1 6.8Total non-current liabilities 79.4 113.5 Current liabilitiesTrade and other payables 266.1 233.3Tax liabilities 2.7 3.2Overdrafts 8 1.4 0.2Interest bearing loans and borrowings 1.7 0.8Provisions 8.2 1.3Total current liabilities 280.1 238.8Total liabilities 359.5 352.3Total equity and liabilities 304.3 329.8 Consolidated cash flow statement Year ended 31 December Notes 2006 2005 £m £m Cash flows from operating activities (Loss)/profit for the period (54.0) 23.6Adjustments for:Depreciation and amortisation 2.7 1.5Finance income 4 (26.7) (23.5)Finance costs 4 23.9 24.1Share based payments expense 9 0.3 0.2Income tax 6 (7.7) 1.4Profit on sale of investment (3.6) -Profit on sale of interest in joint venture - (3.5)Share of loss/(profit) of joint ventures and associates 7 7.0 (13.4)Additions to/(release) of provisions against loans to joint 2.7 (0.3)ventures & associates Operating (loss)/profit before changes in working capital and (55.4) 10.1provisions Increase in inventories (0.4) (1.1)Decrease/(increase) in receivables 2.2 (15.1)Increase in payables 32.6 24.2Movement in provisions and employee benefits (2.6) (3.0) Cash (used by)/from operations (23.6) 15.1 Interest paid (0.3) (0.1)Income taxes paid (0.2) - Net cash (used by)/from operating activities (24.1) 15.0Cash flows from investing activitiesInterest received 2.6 2.4Additions to property, plant and equipment (1.9) (2.4)Additions to intangible assets (0.9) (3.1)Proceeds from sale of fixed assets 0.2 -Additions to investments (0.1) (0.2)Proceeds from sale of investments 7.1 -Capital repayments by investments - 1.3Dividend received from joint venture 6.1 -Loans to joint ventures and associates (10.2) (2.6) Net cash from/(used by) investing activities 2.9 (4.6) Cash flows from financing activitiesIssue of ordinary share capital 9 0.3 0.5New loans 0.9 0.4Payment of finance lease liabilities (0.2) (0.3) Net cash from financing activities 1.0 0.6 Net (decrease)/ increase in cash and cash equivalents (20.2) 11.0 Cash and cash equivalents at beginning of period 75.0 63.5Effect of foreign exchange rate changes 0.2 0.5 Cash and cash equivalents at end of period 55.0 75.0 NOTES TO THE PRELIMINARY ANNOUNCEMENT 1 Basis of preparation These financial statements have been prepared and approved by the directors inaccordance with International Financial Reporting Standards as adopted for usein the EU in accordance with EU law (IAS Regulation EC 1606/2002). The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2006 or 2005 but is derivedfrom those accounts. Statutory accounts for 2005 have been delivered to theRegistrar of Companies, and those for 2006 will be delivered following theCompany's Annual General Meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The directors prepared their 2006 interim financial information on a goingconcern basis though noted that contract write downs and provisions in respectof their Building and International divisions had caused a breach in theirbanking and surety covenants. Further contract write-downs in the second half ofthe year resulted in the Group renegotiating all of its facilities and covenantlevels to June 2008. These renegotiations are now complete with all covenantsre-set accordingly. Having assessed their working capital and bonding requirements against therevised facilities, and the associated covenants against the Group's forecasts,the directors have a reasonable expectation that the company has adequateresources to continue in operational existence for the foreseeable future. Forthis reason, they continue to adopt the going concern basis in preparing theaccounts. NOTES TO THE PRELIMINARY ANNOUNCEMENT - continued 2 Business and geographical segment information by origin In the opinion of the directors, the business segments are Civil Engineering,Building, Oil Gas & Process, International, which undertake engineering andconstruction projects, the Property Development operations in Spain and Centralcosts. These represent the Group's primary segments. Secondary segments arepresented geographically. Segment results, assets and liabilities include items directly attributable to asegment as well as those that can be allocated on a reasonable basis. Centralcosts comprise mainly corporate expenses. Segment capital expenditure is thetotal cost incurred during the period to acquire segment assets that areexpected to be used for more than one period. Year ended Civil Building Oil, Gas & International Property Central Total Engineering Process Development costs31 December 2006 £m £m £m £m £m £m £mRevenueGroup revenue 400.3 288.5 51.4 8.2 - - 748.4Share of revenue of 87.8 9.5 5.8 21.6 13.2 - 137.9JVs and associatesTotal revenue 488.1 298.0 57.2 29.8 13.2 - 886.3 Group operating 10.0 (29.6) (19.8) (13.0) - (6.0) (58.4)lossProfit on sale of - 3.6 - - - - 3.6investmentsProvision against - - - (2.7) - - (2.7)loans to associateShare of profit of 0.3 0.1 0.3 (11.6) 3.9 - (7.0)JVs and associatesSegment result 10.3 (25.9) (19.5) (27.3) 3.9 (6.0) (64.5)Net financing 2.8incomeIncome tax credit 7.7Loss for the period (54.0) Group assets 106.4 52.1 19.0 8.3 - - 185.8Investments in and 3.9 2.3 (0.2) 1.6 23.9 - 31.5loans to JVs andassociatesSegment assets 110.3 54.4 18.8 9.9 23.9 - 217.3Unallocated assets 87.0Total assets 304.3 Group liabilities (147.9) (90.7) (26.7) (13.0) - (1.0) (279.3)Provisions against (0.6) (1.0) (0.2) (3.9) - -JVs and associates (5.7)Segment liabilities (148.5) (91.7) (26.9) (16.9) - (1.0) (285.0)Unallocated (74.5)liabilitiesTotal liabilities (359.5) Capital expenditure 1.0 1.0 0.1 0.7 2.8Depreciation/amortisation 1.0 1.0 0.3 0.4 2.7 NOTES TO THE PRELIMINARY ANNOUNCEMENT - continued Business and geographical segment information by origin - continued Year ended Civil Building Oil, Gas & International Property Central Total Engineering Process Development costs31 December 2005 £m £m £m £m £m £m £mRevenueGroup revenue 309.1 315.5 44.5 9.0 - - 678.1Share of revenue of 20.7 6.1 7.6 15.7 45.0 - 95.1JVs and associatesTotal revenue 329.8 321.6 52.1 24.7 45.0 - 773.2 Group operating 16.0 1.2 (1.2) (2.5) - (4.8) 8.7profitProfit on sale of - 3.5 - - - - 3.5interest in jointventureShare of profit of - (0.4) 0.2 (0.4) 14.0 - 13.4JVs and associatesSegment result 16.0 4.3 (1.0) (2.9) 14.0 (4.8) 25.6Net financing costs (0.6)Income tax expense (1.4)Profit for the 23.6period Group assets 93.0 65.5 21.3 12.7 - - 192.5Investments in and 0.6 0.4 0.3 3.2 26.5 - 31.0loans to JVs andassociatesSegment assets 93.6 65.9 21.6 15.9 26.5 - 223.5Unallocated assets 106.3Total assets 329.8 Group liabilities (99.1) (104.0) (19.3) (9.6) - (15.7) (247.7)Provisions against (1.8) (2.1) (0.2) - - - (4.1)JVs and associatesSegment liabilities (100.9) (106.1) (19.5) (9.6) - (15.7) (251.8)Unallocated (100.5)liabilitiesTotal liabilities (352.3) Capital expenditure 2.2 2.1 0.3 0.9 - - 5.5Depreciation/ 0.5 0.5 0.3 0.2 - - 1.5amortisation Revenue Segment result 2006 2005 2006 2005 £m £m £m £mUnited Kingdom 816.9 673.4 (22.1) 16.3Spain 13.2 45.0 3.9 14.0Rest of the world 56.2 54.8 (46.3) (4.7) 886.3 773.2 (64.5) 25.6 Assets Capital expenditure 2006 2005 2006 2005 £m £m £m £mUnited Kingdom 175.3 177.2 2.1 4.3Spain 25.6 26.5 - -Rest of the world 16.4 19.8 0.7 1.2 217.3 223.5 2.8 5.5 NOTES TO THE PRELIMINARY ANNOUNCEMENT - continued 3 Contract write-downs and costs associated with exit from the International division During the year, the Group announced the following significant amounts chargedto the income statement. The figures have been included within the results ofthe relevant business segment. Civil Building Oil, Gas & International Total Engineering Process £m £m £m £m £m Contract write-downs 7.7 25.0 14.5 - 47.2Charges in respect of the - - - 25.4 25.4International division 72.6 Contract write-downs Following events and developments during the year, the amounts recoverable on anumber of contracts have been written down. As a result the following have beenincluded in the income statement for the year ended 31 December 2006. Write-downs have been made on certain contracts against the value of claims andvariations recognised previously in revenue in accordance with the Group'saccounting policy. This de-recognition reflects changes in the estimates overthe probability of recovery of these amounts. Such changes in estimate reflectspecific circumstances arising in the year, which have led the Group to considerthe amount previously recorded to be no longer probable of recovery, or wherethe amount of recovery can no longer be reliably measured. As a result, £32.8mhas been de-recognised through the revenue line in the year. A charge of £14.4m in respect of works during the year that are not probable ofbeing recovered is included in cost of sales. This includes immediaterecognition of losses on certain contracts where costs are anticipated to exceedthe total contract revenues. International On 30 June 2006, the Group took the strategic decision to exit from theInternational division following persistent underperformance. This decisionrequired the Group to fulfil its remaining contractual obligations, some ofwhich will be on-going throughout 2007, recover outstanding contractual amounts,realise its remaining investments and wind up the residual business. Events in the year on certain of these contract obligations have resulted in theimmediate recognition of forecast losses, totalling £12.0m, based on theestimated cost to completion. This amount has been included in the Group'sshare of joint ventures and associates. Group revenue has also been impacted by a reversal of £6.8m in respect ofamounts previously recognised on claims and variations. As per the descriptionabove on contract write-downs, changes in estimate with respect to recovery ofthese balances reflect specific circumstances arising in the year. Thesedevelopments have led the Group to consider the amount previously recorded to beno longer probable of recovery. A write-down of £2.7m has been made against the carrying values of loans toCostain West Africa Plc, an associated company. Further irrecoverable costs of£3.4m in respect of the International division as a whole have been charged tocost of sales. A provision of £0.5m in respect of closure costs has been included inadministration expenses. NOTES TO THE PRELIMINARY ANNOUNCEMENT - continued 4 Net financing income / (costs) 2006 2005 £m £mInterest income 2.6 2.4Expected return on the assets of the pension scheme 24.1 21.1Financial income 26.7 23.5 Interest expense (0.3) (0.1)Losses on foreign exchange forward contracts - (0.1)Expected increase in the present value of the scheme liabilities (23.6) (23.9)Finance costs (23.9) (24.1) Net financing income / (costs) 2.8 (0.6) 5 Earnings per share The calculation of earnings per share is based on loss attributable to equityholders of the parent of £54.0m (2005 profit: £23.6m) and the number of sharesset out below: 2006 2005Weighted average number of shares for basic earnings per share 357,050,423 353,355,346calculationDilutive potential ordinary shares:SAYE Scheme 6,314,913 7,945,390Weighted average number of shares for fully diluted earnings per share 363,365,336 361,300,736calculation The anti-dilutive effect of the potential ordinary shares have been excluded forthe purposes of calculating the 2006 diluted earnings per share because thiswould increase the diluted earnings per share. 6 Income tax 2006 2005 £m £mOn (loss) / profit for the year:United Kingdom corporation tax at 30% 0.1 (1.0)Adjustments in respect of prior years 0.2 -Current tax credit / (charge) for the year 0.3 (1.0)Deferred taxation 6.6 (0.4)Adjustments in respect of prior years 0.8 -Total income tax credit / (expense) in the income statement 7.7 (1.4) 2006 2005 £m £mTax reconciliation:(Loss) / profit on ordinary activities before taxation (61.7) 25.0 Income tax at 30% 18.5 (7.5)Rate adjustments relating to overseas profits (0.2) 0.1Share of results of joint ventures and associates at 30% (2.1) 4.0Disallowed provisions and expenses (4.4) (1.6)Profits relieved by capital losses 1.1 1.0(Increase) / reversal of temporary differences (6.2) 2.6Adjustments in respect of prior years 1.0 -Total income tax credit / (expense) in the income statement 7.7 (1.4) The income tax expense above does not include any amounts for joint ventures andassociates, whose results are disclosed in the income statement net of tax. NOTES TO THE PRELIMINARY ANNOUNCEMENT - continued 7 Investments The analysis of the Group's share of joint ventures and associates is set outbelow: 2006 2005 Alcaidesa Other Alcaidesa Other Holding 4Delivery joint Holding 4Delivery joint SA Ltd ventures Associates Total SA Ltd ventures Associates Total £m £m £m £m £m £m £m £m £m £m Revenue 13.2 84.6 26.5 13.6 137.9 45.0 16.5 21.0 12.6 95.1 Profit/(loss) 6.1 - (10.9) 0.1 (4.7) 22.5 - 0.8 (1.1) 22.2before taxIncome tax expense (2.2) - (0.1) - (2.3) (8.5) - (0.3) - (8.8)Profit/(loss) for 3.9 - (11.0) 0.1 (7.0) 14.0 - 0.5 (1.1) 13.4the period Non-current assets 5.7 - 7.2 2.4 15.3 7.4 - 0.7 2.0 10.1Current assets 33.6 25.1 82.1 51.4 192.2 40.2 4.4 63.6 20.5 128.7Current (8.1) (25.1) (20.0) (12.9) (66.1) (15.6) (4.4) (19.5) (7.5) (47.0)liabilitiesNon-current (7.3) - (68.2) (39.7) (115.2) (5.5) - (43.7) (14.8) (64.0)liabilitiesInvestments in 23.9 - 1.1 1.2 26.2 26.5 - 1.1 0.2 27.8joint ventures andassociates Financial - - 9.3 - 9.3 - - 9.5 - 9.5commitments Capital - - 25.1 - 25.1 - - 36.3 - 36.3commitments Net interest receivable by joint ventures and associates in 2006 was £1.8m(2005: £1.6m payable). The financial commitments relate to joint ventures involved in Private FinanceInitiative (PFI) schemes and the capital commitments to construction work beingundertaken by the Costain Group. All figures are the Group's share. 8 Cash and cash equivalents Cash at bank and in hand is analysed below and includes the Group's share ofcash held by joint arrangements of £22.0m (2005: £25.0m). Group 2006 2005 £m £mCash and cash equivalents 56.4 75.2Bank overdrafts (1.4) (0.2)Cash and cash equivalents in the statement of 55.0 75.0cash flows 9 Capital and reserves Group Share Share premium Special Fair value Translation Hedging Retained Minority Total capital account reserve reserve reserve reserve earnings Total interests equity £m £m £m £m £m £m £m £m £m £m At 1 January 2005 35.3 119.5 - - (0.4) (1.7) (199.0) (46.3) 0.1 (46.2)Total recognisedincome & expense - - - 3.4 (0.8) (3.3) 23.8 23.1 (0.1) 23.0 Share based - - - - - - 0.2 0.2 - 0.2paymentsCapital reduction (17.6) (119.5) 13.6 - - - 123.5 - - -Shares issued 0.1 0.4 (0.5) - - - 0.5 0.5 - 0.5At 31 December 17.8 0.4 13.1 3.4 (1.2) (5.0) (51.0) (22.5) - (22.5)2005 At 1 January 2006 17.8 0.4 13.1 3.4 (1.2) (5.0) (51.0) (22.5) - (22.5)Total recognised - - - (0.8) - 3.4 (35.8) (33.2) - (33.2)income & expenseShare based - - - - - - 0.2 0.2 - 0.2paymentsShares issued 0.1 0.2 (0.3) - - - 0.3 0.3 - 0.3At 31 December 17.9 0.6 12.8 2.6 (1.2) (1.6) (86.3) (55.2) - (55.2)2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Costain