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Contractor Costain Group secures new TfL projects deal as its order book holds steady

Last updated: 08:35 05 Jan 2017 GMT, First published: 07:59 05 Jan 2017 GMT

Rail workers
Costain said its order book at the year-end has been maintained at £3.9bn

Engineering contractor Costain Group PLC (LON:COST) announced it has secured a place on Transport for London's new £500mln major projects framework as it revealed that its order book has been maintained at the same level as last year.

In a trading update, the firm – which is involved in the construction of Crossrail and the rebuilding of London Bridge station - said it has continued to perform well since its interim results, released on August 24, and expects to deliver full year results in line with the board's expectations.

Costain said it has secured a number of "significant new orders" and contract extensions in 2016, noting the High Speed 2 South Enabling Works contract and the Area 14 Maintenance commission for Highways England.

As a result, Costain said its order book at the year-end has been maintained at £3.9bn, in line with a year earlier, and the group said its revenue secured for 2017 currently stands at over £1.2bn, up on the £1.1bn it had secured a year earlier.

The firm added that, following good cash generation towards the end of the trading period, it finished the year with a strong net cash position of over £100mln.

In an initial note to clients this morning, analysts at Liberum increased their target price for Costain to 430p from 405p and reiterated a ‘buy’ rating on the stock due to the better cash position.

They said: “Cash, a concern at the interims, is better than expected at the FY. Order book flat at £3.9bn, but improved near term visibility.”

In early trading, Costain shares edged 0.6%, or 2.25p higher at 360.25p.

Major projects ...

In a separate statement, Costain also said it has won a place on TfL's Surface Transport Major Projects Framework, which covers the delivery, upgrade and maintenance of bridges, tunnels and highways across London.

The group said it is one of three suppliers for the four-year project, and noted that the framework may be extended by two further years at the discretion of Transport for London.

Andrew Wyllie, the firm’s chief executive, said: "Costain has had another strong year. Our customers are undertaking substantial investment addressing urgent national needs and we are looking forward to the future with confidence."

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