Costain brushes off further PFI waste losses

Costain has suffered further losses on a problem PFI waste job in Manchester, but nonetheless posted a rise in profit, revenue and order book for the first half of 2016.

The construction group posted pre-tax profit of £11.3m, up from £10m last year, despite being hit by an £8.4m loss - on top of the £7.4m loss it made in the half-year period last year - in its natural resources division due to problems on its Manchester waste PFI contract.

The loss includes further costs and provisions of £11.4m in relation to the completion of the legacy Greater Manchester Waste Disposal Authority PFI contract awarded in 2007.

Costain reported a rise in revenue to £791m, up from £621m, while its order book is up 5% to a record £3.9bn.

The majority of revenue came from the firm’s infrastructure division, which posted a jump in revenue £613m, up from £475m

.Costain said the order book for the division has increased to £2.9 billion from £2.7bn last year, with infrastructure tendering activity high as it continues to prioritise its bidding activity “in the areas that currently provide the greatest opportunity.”

The firm said the development of the M4 corridor around Newport, Crossrail, London Bridge, Thames Tideway, Network Rail’s £2bn electrification programme and the £100m Shieldhall Tunnel - a sewage tunnel in Glasgow being built by a Costain and Vinci joint venture - all contributed to its increase in revenue.

Despite the uncertainty from the Brexit vote, the firm said it had not yet been impacted and remained upbeat, highlighting the “major customers who are continuing to spend billions of pounds addressing critical UK infrastructure needs”.

Commenting on the results, chief executive Andrew Wyllie said: “These are exciting times as billions of pounds are being spent upgrading and renewing the country’s energy, water and transportation infrastructure.

“There is a revolution in the deployment of technology-led innovative solutions to meet the increasingly complex requirements of our national infrastructure needs, and we are continuing to rapidly transform the Costain business to be at the heart of the opportunity this presents.”