TIDMCOST
RNS Number : 1767E
Costain Group PLC
08 May 2013
Costain Group PLC
("Costain" or "the Group")
Interim Management Statement
Costain, one of the UK's leading tier one engineering solutions
providers, delivering integrated consulting, project delivery and
operations and maintenance services, announces its Interim
Management Statement covering the period from 1 January 2013 to the
current date. The Group is holding its Annual General Meeting later
today.
Update
Following its good performance in 2012, the Group has had a
strong start to the current year and is performing in line with the
Board's expectations.
Costain is continuing to secure new work from major blue-chip
customers who are investing billions of pounds in capital,
operations and maintenance contracts and who require increasingly
innovative solutions to their complex requirements.
Costain's success in identifying, developing and implementing
innovative solutions to meet those customer requirements is
demonstrated in the following examples of new work won since the
start of the year:
- In anticipation of Network Rail's GBP9.4 billion investment in
electrifying Britain's railways, Costain established a joint
venture to develop a range of innovative solutions that would
directly meet the customer's requirements. As a result, the Group
announced that it had won the West Coast Power Supply Upgrade
contract, its first contract as part of a circa GBP300 million
investment by Network Rail in power upgrade.
- As a consequence of an intense focus on understanding the
customer's specific needs, the Group secured, in joint venture, a
further four contracts from Crossrail. The latest awards include
the very important circa. GBP300m contract to design, fit-out and
commission the railway systems across Crossrail's tunnel
network.
- By implementing new service attributes, innovation and
performance enhancement into an existing contract, the Group was
recently awarded by the Highways Agency a two-year extension to its
Managing Agent Contractor Area 7 maintenance contract.
- Following the successful completion earlier this year of the
engineering design, procurement and construction management at
Centrica's Easington Gas Terminal, enabling the production of gas
from the York field in the Southern North Sea, we have received a
repeat order from Centrica for the front end engineering design
(FEED) at the Barrow terminals which service the East Irish Sea gas
fields.
Order book
As a result of new contract awards and extensions the Group's
quality forward order book has increased to GBP2.5 billion (31
December 2012: GBP2.4 billion), of which over 90% is repeat
orders.
In addition, the Group has also increased its preferred bidder
position to over GBP500 million (31 December 2012: over
GBP400m).
To date, over GBP800 million of revenue has been secured for
2013.
The overall level of tendering activity across the Group's
targeted markets remains high.
Financial position
The Group continues to benefit from a robust financial position
with a strong net cash position.
In its full-year results announcement the Group highlighted that
net cash would trend lower as the Group benefits from its increased
emphasis on support service related activities and on customers who
increasingly utilise a target cost based form of contract, together
with changing industry cash flow profiles.
Proposed all-share merger with May Gurney Integrated Services
plc ('May Gurney')
The Boards of Costain and May Gurney announced on 26 March 2013
that they had reached agreement on the terms of a recommended
all-share merger of Costain and May Gurney (the 'Proposed
Merger').
On 24 April 2013, the Boards of Kier Group plc ('Kier') and May
Gurney announced that they had reached agreement on the terms of a
recommended offer for May Gurney by Kier (the 'Kier Offer'). At the
time of such announcement, the value of the Kier Offer represented
a premium of approximately 35 per cent. to the then value of the
Proposed Merger.
On 25 April 2013, Costain announced that, having undertaken
several months of detailed due diligence, it did not believe that
it would be in the best interests of Costain shareholders for
Costain to amend the terms of the Proposed Merger, that it would
not be making a revised offer for May Gurney and that it intended
to lapse the Proposed Merger at the earliest opportunity.
Accordingly, the Proposed Merger is expected to lapse, in
accordance with its terms, on 29 May 2013.
The Group incurred transaction costs of approximately GBP4m
(pre-tax) associated with the May Gurney proposal and these will be
expensed in the first half results and treated as a one-off non
trading item.
Outlook
Costain's continuing progress, despite challenging economic
conditions, is a reflection of the Group's strategic focus on
meeting the complex needs of customers by providing an integrated
consulting, project delivery and operations and maintenance
capability.
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 strong financial resources and an increased order book, the
Board remains confident of meeting its expectations in 2013.
8 May 2013
Enquiries:
Costain Tel: 01628 842 444
Andrew Wyllie, Chief Executive
Tony Bickerstaff, Finance
Director
Graham Read, Communications
Director
College Hill Tel: 020 7457 2020
Mark Garraway
Helen Tarbet
This information is provided by RNS
The company news service from the London Stock Exchange
END
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