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Costain yet to settle problem waste PFI termination

Costain is yet to reach a settlement on its problematic PFI contract with Greater Manchester Waste Disposal Authority, the contractor has revealed.

In a trading update this morning - ahead of its half-year results announcement for the six months to 30 June 2017 - the firm said discussions were continuing with Greater Manchester Waste Disposal Authority (GMWDA) and Viridor Laing, for whom Costain is acting as subcontractor.

The contractor added that a further announcement would be “made as appropriate”.

GMWDA this May confirmed that it intended to terminate its 25-year PFI waste processing deal with Viridor Laing.

The joint venture between Viridor and John Laing was named preferred bidder in January 2007 for the £3bn PFI contract to deliver long-term waste management for the city.

As part of this deal, Costain was handed a £397m subcontract to design, construct and commission 46 waste facilities across Greater Manchester.

But the works have been beset with problems and Costain incurred losses of £15.1m from the contract in its H1 2017 results.

Construction News reported earlier this year that GMWDA had raised concerns over the speed and quality of repair works being carried out by Costain.

Meanwhile, Costain confirmed in today’s trading update that it was on track to meet management expectations for its full-year.

The contractor reported an order book of £3.7bn as of 30 June, with 90 per cent of work secured being repeat orders, while the group said it was also in preferred bidder position for more than £400m of projects.

Its net cash position at 30 June 2017 stood at more than £80m, up from £69.2m a year earlier.

Recent contract wins for the firm include a £96m deal to upgrade a section of the M1 to smart motorway in a joint venture with Skanska.

In its most recent full year, the contractor reported a pre-tax profit of £30.9m for the year ending 31 December 2016, up from £26m the prior year. 

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