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Costain delays results to wait for arbitration decision but says period was profitable

The order book was confirmed at £4.2bn at the end of June, following more than £2bn of contract and framework wins in the half

Costain Group -

Costain Group PLC (LON:COST) has pushed back the date of its interim results due to an arbitration decision on the A465 road contract but said both of its transportation and natural resources divisions have been profitable in the period.

The construction firm expects to report a half-year operating profit of £5.7mln at group level, excluding the A465 and Peterborough & Huntingdon (P&H)  contracts.

The order book was confirmed at £4.2bn at the end of June, following more than £2bn of contract and framework wins in the half, which includes £1.1bn for HS2 but excludes the company’s share of the £4.5bn Smart Motorways Alliance award in April that is expected to be around £1bn.

Chief executive Alex Vaughan said the group was back on-site across all its operations, with activity levels “stabilised”.

Having completed a £100mln capital raise in May, the group boasted a net cash balance of £110mln at the period end and Vaughan said Costain was seeing the benefit of its strengthened balance sheet in the winning of new contracts and framework awards. 

Half-year results, which had been due on Wednesday, have been rescheduled for September 14 in order to wait for an arbitration decision that has been accelerated and is now expected no later than September 9, which the company said will enable it “to more accurately report on the financial position of the contract”.

For the P&H contract, Costain said it expects a contract asset of £49.3mln when the demobilisation of the contract concludes at the end of August, referring to work undertaken but not yet paid.

As it waits for the resolution process to conclude over the next 18 months, Costain said it will treat this £49m as exceptional in the first-half results, which will reduce its key metric of net assets. 

The shares fell 5% to 54.5p in early trading on Monday morning.

Quick facts: Costain Group

Price: 58.9 GBX

LSE:COST
Market: LSE
Market Cap: £162 m
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