Costain has reported a record £3.7 billion forward order book and strong performance with increases in revenue and underlying operating profit, and a 15% increase in the interim dividend for the first six months of 2015, with the publication this morning of its interim results for the half-year ended 30 June 2015
The engineering solutions provider, has reported another good overall trading performance in the first half of 2015, reflecting strong growth in the Infrastructure division.
Revenue and underlying operating profit increased – Costain said the Group’s customer-focussed strategy has generated a record order book of £3.7 billion (30 June 2014: £3.2 billion). Over 90% of the order book comprises repeat orders and over 90% lower risk target cost, cost reimbursable forms of contract. The Group also has a strong preferred bidder position, increased to over £500 million (2014:over £400 million).
Post the period-end Costain completed the acquisition of Rhead Group, a professional services consultancy with a focus on programme and commercial management, which further enhances the range of integrated services provided to customers. Costain’s strategy is to focus on major customers spending billions of pounds addressing national needs in energy, water and transportation.
According to Costain, those customers are consolidating their supply chains and are seeking an increasingly integrated service offering from their Tier One service providers through larger, longer-term collaborative contracts. Rhead Group will further enhance Costain’s programme management and advisory capability across all of the Group’s operations as part of that integrated service offering.
Costain said that following the strong start to the year, the Group is on course to deliver a result for the full year at the upper end of the Board’s expectations. Reflecting the Board’s confidence for the future, the interim dividend has been increased by 15%.
Revenue, including the Group’s share of joint ventures and associates, for the half-year ended 30 June 2015 increased by 17% to £621.1 million (2014: £529.1 million), and Group underlying operating profit was also up 17% to £13.1 million (2014: £11.2 million).
In the water sector, part of Costain’s Natural Resources Division, the Group said it has continued to deliver successfully and to close out AMP-5 frameworks for United Utilities, Southern Water, Severn Trent Water, Welsh Water and Northumbrian Water. A number of contracts within AMP-5 will continue throughout 2015 into 2016, including delivery of the large waste water treatment plants at Liverpool and Woolston. The new AMP-6 five year programmes have been successfully mobilised for Thames Water, Severn Trent Water and Southern Water- as a result Costain anticipates an increase in revenue in the second half of the year. In addition, work has commenced on the Shieldhall contract with Scottish Water.
Andrew Wyllie CBE, Chief Executive, commented:
“We have delivered another strong performance in the first half of the year. In addition to growth in revenue and profit, our order book now stands at a record £3.7 billion.
“Costain has an established reputation for delivering innovative integrated services that enables the Group to win large, long-term contracts addressing the UK’s national needs in energy, water and transportation.
“Costain is accelerating its growth and following the 17% increase in underlying operating profit in the first half of the year is on course to deliver a result for the year at the upper - end of the Board’s expectations. Our confidence for the future is reflected in the 15% increase in dividend.”
The Group’s ‘Engineering Tomorrow’ strategy involves focusing on blue chip customers in chosen sectors whose major spending plans are underpinned by strategic national needs, regulatory commitments or essential maintenance requirements.