Engineering solutions provider Costain has reported a record £3.9 billion order book with the publication today of its latest trading update for the year ended 31 December 2015, ahead of its full year results announcement on 2 March 2016.
Costain is a key Tier 1 contractor in the UK water sector and belongs to a number of the Alliances charged with the delivery of the water companies’ AMP6 investment programmes between now and 2020.
In the water sector, part of Costain’s Natural Resources Division, a number of the Group’s AMP5 contracts have continued 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 – the Group had already anticipated an increase in water sector revenue in the second half of the current financial year.
Since the announcement of the Group’s interim results on 20 August 2015, Costain has continued to perform well and expects to deliver full-year results in line with expectations.
Costain said the Group’s blue-chip customers continued to invest in upgrading and renewing the UK's energy, water and transportation infrastructures - as a result, Costain continued to be awarded large scale contracts and contract extensions requiring a range of integrated services.
The Group’s order book has further increased, finishing the year at a new record level of £3.9 billion (31 December 2014: £3.5 billion) and includes over £1.1 billion of revenues secured for 2016 (as at 31 December 2014: over £1.0 billion secured for 2015). The order book also provides good long-term visibility with £2.8 billion of revenues secured for 2017 and beyond.
Costain said the strategic nature of its long-term customer relationships had once again ensured that over 90% of the order book comprises repeat business and is in target cost, cost reimbursable, collaborative forms of contract providing good long-term visibility.
As well as a record order book, Costain has also maintained a strong preferred bidder position which, as at 31 December 2015, stood at over £500 million, and the Group is actively tendering for work across all its target markets.
Costain finished the year with a strong net cash position of over £100 million. This follows significant investment in the Group’s strategic development including the £36 million acquisition in August 2015 of Rhead Group, which has already been substantially integrated and which will be earnings enhancing in 2016.
Rhead Group, a professional services consultancy with a focus on programme and commercial management, further enhances the range of integrated services the Group provides 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, these 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.
Commenting on today’s trading update, Andrew Wyllie CBE, Chief Executive, said:
“Costain has had another good year. We also have good visibility over the medium-term, having finished the year with a record order book and a strong net cash position, providing confidence for the future.”
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