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Costain infra profits almost trebled in strong 2012

Costain saw rail and roads profits almost trebled in 2012.

The contractor’s group profits were up 16 per cent to £29.5 million for the year to 31 December 2012, from £25.5m a year before, despite a 5 per cent fall in revenue to revenue, including joint ventures, from £986.3m to £934.5m.

Infrastructure was particularly strong, which includes the highways, rail, and airports sectors, and saw revenue up to £562.3m (2011: £466m), with adjusted profit from operations up from £10.2m to £26.1. The order book rose from £1.5bn to £1.6bn.

That division saw the firm’s fifth contract win with Crossrail, while work continues on London Bridge Station.

Energy and process saw a drop in revenue and profits partly due to restructuring and additional costs to complete on two projects.

The contractor said that in general the big clients are consolidating their supply chains as they look to work in a much more strategic and collaborative way with a reduced number of preferred tier one contractors.

Costain said it continues to focus on blue chip customers, and said it is seeing customers “rapidly changing their procurement approach, consolidating abroader range of services across consulting, project delivery and operations activities into larger, longer-term contracts”.

It gave the £288m Magnox deal as an example of this type of contract.

David Allvey, Chairman, said: “The group believes that, driven by innovation, the strategic development of the business will be accelerated as we work with customers on their future programmes.

“With a robust balance sheet, positive net cash position and banking and bonding facilities in place, we have the resources to continue to grow the business organically and by acquisition.”

The firm has decided to raise the dividend for the sixth consecutive year.

The group order book was £2.4bn (2011: £2.5bn), in excess of 90 per cent from repeat orders including new awards and extensions to existing contracts.

Costain also had year-end cash of 105.7m, down 25 per cent on the 2011 level  of £140.1m.

The year saw the sale of £10.5m of PFI assets into the pension fund to address the deficit, now at £40m, and £2.8m one-off costs resulting from pension scheme liability actions.

In the environment division, revenue (including share of joint ventures and associates) was £232.6 (2011: £375.4m), with profit from operations, including the profit on PFI transfers, of £15m (2011: £17.5m). Order book was down from £0.8bn to £0.6bn.

But excluding the PFI sale, operating profits in this division were down from £16m to £3.6m.

In energy and process, revenue (including share of joint ventures and associates) for the year was £137.7m (2011: £143.4m) with adjusted profit from operations of £2.5m (2011: £4.7m). The division was hit by the reduced revenue, higher business development costs, restructuring costs and additional costs to complete on two projects.

Land development activity in Spain continued to be subject to challenging market conditions. Revenue was £1.9 million (2011: £1.5 million) and the loss after tax was £2.3m (2011 £2m).

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