Problems in Spain drag down Costain's profit

Costain’s profit nearly halved last year, after the firm made a £10m write down to the value of its land development business in Spain.

The news came as the firm posted its results for the year to 31 December 2013 this morning, with pre-tax profit falling 48% to £12.9m, down from £24.7m last year.

The fall in pre-tax profit was largely a result of a write down of the firm’s 50% stake in its land development business in Spain, alongside Santander.

The firm wrote down the value of its share of the business by £9.8m “as a consequence of continuing uncertainty regarding future market conditions in Spain”.

This combined with exceptional transaction costs, amortization of assets and other employment costs resulted in a total of £18.1m of exceptional costs, compared with just £3.4m of exceptional costs in 2012.

When these items were excluded the firm reported a rise in pre-tax profit to £31m, up from £28m in the previous year.

Revenue at the group, including shares of joint ventures, rose to £960m, up from £935m the previous year.

The firm also increased its order book by 25% to £3bn at 31 December 2013, up from £2.4bn a year earlier.

Meanwhile, Costain said it was looking to raise £75m through a share placing to help finance bids for large scale projects in its key infrastructure, energy and water markets.

Writing in the firm’s accounts Costain chair David Allvey, said the capital from the share placing would “enable Costain to capitalise” on opportunities to win “large longer-term contracts” and “invest in innovation and technology”.

He said the money would also be used to make acquisitions, finance bid costs and fund increased working capital.

Allvey said all this would “accelerate to group’s development”.