Two problem contracts have seen Costain post a £92.3m loss for the first half of 2020, but the company remains confident of delivering growth in profits and margins next year.
Announcing its financial results for the half year ending 30 June 2020, Costain posted a pre-tax loss of £92.3m against revenue of £548.7m. This compares to a pre-tax profit of £8.4m on revenue of £599.2m for the same period last year. (2019).
The figures reflect a £49.3m loss on a gas turbine contract in Peterborough and Huntingdon, and a £45.4m loss on the A465 Heads of the Valleys road contract.
However, the company has secured over £2bn of new work during the first half of the year, has an order book of £4.2bn and, thanks to a £100m rights issue, has a net cash balance at 30 June 2020 of £140.9m. This compares to a net cash balance of £40.8m in the same period last year.
Alex Vaughan, Costain chief executive officer, said: "We are now back on site across all of our operations with strict safety measures in place to protect our teams and the communities we work in. I would like to pay tribute to our people who have done everything they can to look after one another and to do the right thing by our clients, communities, society and to protect our business during this pandemic.
"We are clearly disappointed with the recent arbitration outcome in relation to the A465 contract which, together with the mutual termination of the Peterborough & Huntingdon contract, has resulted in significant revenue adjustments for these long-standing projects. We have in place clear actions to resolve the financial position on these contracts and importantly we have taken decisive action to prevent such issues from reoccurring.
"The equity raise in May has already helped us to capitalise on the immediate opportunities in our infrastructure markets as we successfully secured over £2bn of contracts in the first half, many of which incorporate our consultancy and digital capabilities in line with our strategic focus. There remains a strong pipeline of further opportunities which we are actively targeting.
"Looking ahead, assuming no further sustained Covid-19 lockdowns, we are confident of delivering growth in profits and margins next year. Although we are mindful of the macro-economic uncertainties ahead, Costain is in a strong position with secured long-term programmes and a positive market backdrop, in particular the UK government's drive to progress investment in infrastructure so that it is better, greener and faster in support of the nation's economic recovery."