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Costain settles with Welsh Government over A465 road contract

Costain took a provision of £45mln in its interim results

National Grid -

Costain Group PLC (LON:CSTN), the civil engineering contractor, has agreed a settlement on its troublesome A465 road contract with the Welsh Government.

The two sides had been in dispute over a retaining wall on the trunk road connecting Neath and Abergavenny, which has pushed the work back by around two years.

Costain took a provision of £45mln in its interim results and today said the financial impact of the settlement would be within this.

“As a result of the Settlement, the Company has certainty of the final account sum payable by the Welsh Government to the Company, including further milestone payments,” Costain said in a statement.

“Work on the contract is nearing completion, and the company continues to be responsible for the delivery and the management of associated project risks for the remaining works, which are scheduled to be completed in September 2021,” it added.

Liberum said; “Work on the project is expected to complete in September.

“The statement indicates that the settlement is in line with the provision made by the group for FY 20 and we expect a cash outflow of £17m in line with guidance.

“It is encouraging to see the A465 de-risked. We expect an update on the arbitration process for National Grid at the prelims on 9 March.”

Shares were unchanged at 59p.

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