Costain has expressed its confidence for 2021 and beyond, despite reporting a pre-tax loss of £96.1m in 2020.
The loss was largely due to what the company described as “significant charges in relation to the Peterborough & Huntingdon (P&H) and A465 road contracts” and, despite the financial impact of Covid-19, was in line with revised expectations.
However, on a more positive note, the company’s annual report for the year ending 31 December 2020 also showed a £4.2bn order book and strong net cash of £102.9m (2019: £64.9m).
The report also highlighted that significant operational improvements, a new leadership team, a de-layered organisational structure, improved contract selection and risk management processes and continued momentum in securing new work in line with strategic focus were all combining to ensure the company was operating effectively and profitably.
And, according to the report, a substantial and growing infrastructure market, positioned on significant long-term underwritten investment programmes, meant the company was confident in delivering growth in profits and margins in 2021.
Alex Vaughan, Costain chief executive officer, said: “Last year was a challenging year but I am proud of how well everyone at Costain responded and the resilience shown across our business which enabled us to continue to operate effectively with strict Covid-19 safety measures in place.
"We are pleased to report an adjusted operating profit of £18.0m, despite the financial impact from Covid-19. The significant charges reported at the half-year relating to two contracts are clearly disappointing, and importantly we have taken robust steps to prevent such issues from reoccurring.
"Last year, we continued to be successful in winning new contracts and preferred bidder positions worth over £2.3bn with an increasing proportion of this work incorporating our broader service offering in line with our strategy.
"The UK government has provided a clear strategic framework for UK infrastructure investment, underpinned by long-term underwritten investment programmes to support the UK government's drive to level-up economic growth and to meet decarbonisation commitments. I am confident that Costain is in a good position to capitalise on the opportunities in front of us and to grow our profits in 2021."