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Costain makes £9.1m on water venture sale

Costain made a £9.1m profit from the sale of its stakes in three joint ventures, it has told investors.

It sold the holdings to Severn Trent Water as part of its disposal of its PFI equity portfolio.

At the end of 2013 its orders were up by a quarter to £3bn compared with 2012, of which more than 90 per cent are repeat orders. It has secured more than £750m of work for this year – up from the £700m it had for 2013 at this point in 2012.

It is also preferred bidder on deals worth more than £400m and it ended 2013 with net cash.

The firm paid £2.4m to Serco for the remaining 27 per cent stake in their managed motorway technology joint venture, which has a place on the Highways Agency framework to provide technology-led improvements. It already owns the remaining 73 per cent of the venture.

Analysts at Liberum Capital and Investec Securities were positive about the firm’s orders and contract wins, although they had different predictions of what its net cash position would be like at the 2013 year-end.

Liberum Capital said the order book was strong, and liked the acquisition of the Serco managed motorways joint venture. It said cash was weak but in line with forecasts and maintained its prediction of £48m net cash at year end for 2013. It recommended that investors hold the shares.

Investec Securities said Costain looked good value because its focus on repeat clients and revenue from services was not reflected in the current share price, so investors should buy them.

It expected net cash to grow by £11m from its previous forecast to £44.4m, reflecting the cash it received from selling the stakes to Severn Trent Water.

Costain chief executive Andrew Wyllie said: “We are delighted to finish the year with a very strong order book.

“Our continued success is the direct result of our focus on delivering innovative engineering solutions for blue-chip customers who are investing in meeting national needs.”


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