While elsewhere in the country many of Costain’s front-line workers are still on site, observing the new Site Operating Procedures and social distancing, in London this has not been possible.
To help cope with the crisis, the board and senior leadership team have agreed a 30% reduction in salaries and directors' fees for up to three months.It is also making reductions to its cost base and deferring capital expenditure, as well as VAT and PAYE payments.
In a statement today, Costain said: “Where we provide a critical range of services to strategic highway, local authority clients and to water utilities, we have seen our activities continue at safe levels of operation. These services represent c.50% of our annual revenues.
“In our consultancy services to energy, defence and aviation, which together represent c.10% of our annual revenues, we are seeing little change in demand.
“However, in London to ensure safe travel while social distancing and where operational issues affect us, on-site construction activities including on our Crossrail, HS2 Enabling Works and Thames Tideway contracts have been paused, pending further review, at the request of our clients. On-site construction activities which have been paused represent c.30% of our revenues. Home based activities which are continuing on these projects represent c.10% of our revenues.”
Meanwhile, Costain’s desperate call for cash to save the business is continuing despite turmoil in the financial markets caused by the global coronavirus pandemic.
Costain said today that its proposed new capital raising of up to £100m was continuing – with underwriters on standby. The capital raising is fully underwritten by HSBC, Investec and Liberum.
The cash call was announced on 11th March as Costain reported a pre-tax loss of £6.6m for 2019. It said at the time that the growing use of project bank accounts and the requirements of the Prompt Payment Code to pay suppliers on time meant that it had less cash available for general working capital.
Chief executive Alex Vaughan said: "We are continually monitoring and implementing the necessary measures to safeguard those who continue to work on essential projects across the UK. Our priorities remain their safety and wellbeing, doing the right thing for society, continuing to support our clients and protecting the financial strength of the group.
"I am confident that the steps we are taking to manage our business through this uncertainty will ensure we are well placed to respond strongly once our operations can fully resume."