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Costain breaks through £1bn-turnover mark, but profit falls

10 Mar 10 Costain has posted annual revenue of £1.06bn for the year ending 31 December 2009 (2008: £996m), the first time the contractor has passed the £1bn-turnover mark for 16 years.

Costain has posted annual revenue of £1.06bn for the year ending 31 December 2009 (2008: £996m), the first time the contractor has passed the £1bn-turnover mark for 16 years.

However, profit before tax was down £5m at £18.1m, chiefly due to high interest charges on its pension scheme.

Costain has a record year-end forward order book of £2.6bn, an increase of 30% on the £2bn reported a year ago. Some 84% of orders are repeat customers, and around £900m represents secured work for 2010.

Additionally, the contractor is currently at preferred bidder on over £600m worth of contracts.

Costain is in a strong net cash position, with £120.5m (2008: £146.6m), and its average month-end cash balance throughout the year was £125.3m (2008: £117.4m).

The deficit in the firm’s UK pension scheme, in accordance with IAS 19 was £75.4m at 31 December 2009, net of deferred tax. This is more than double the £36.1m of a year before.

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Operations review

Environment (water, waste and marine). The division's order book increased by 66% to £1.3bn and Costain expects “a high level of investment to continue in these sectors over the coming years”.

Infrastructure (highways, rail and airports). Highways maintenance activity accounts for the majority of Costain’s maintenance related-activities which represent 13% of total orders.

Energy & Process (hydrocarbons and chemicals, nuclear processing and power). Costain secured further work on the major EVAP D nuclear decommissioning project at Sellafield, and sees potential for further growth in this sector.

Community (health, education and retail). This division was intentionally scaled down as Costain continues “to allocate resources to more attractive opportunities”. The firm disposed of two PFI equity stakes in the year.

The contractor is pushing its ‘Choosing Costain’ strategy, “a commitment to delivering a full-service offering, from front-end engineering consultancy and design, through construction to maintenance”.

It will focus on the infrastructure, environment, plus energy and process markets where Costain will look for repeat orders from blue-chip customers who require 'life cycle' services for their assets.

“We can be pleased with the strong business performance delivered in 2009, particularly in view of the difficult macroeconomic conditions we faced,” said Andrew Wyllie, chief executive.

“Looking ahead, our continued success will be built on our leading positions in markets that are underpinned by strategic capital expenditure, regulatory commitment and essential maintenance requirements.”

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