Engineering consultancy Costain (COST) was buoyed by its infrastructure division during the first half, boosting the group's adjusted operating profit by almost a fifth to £13.1m. This growth is all the more impressive considering the £7.4m operating loss booked by the group's natural resources division, which was burdened by costs linked to a legacy PFI contract for the Greater Manchester Waste Disposal Authority.
The group has continued with its focus on lower-risk contracts that service the country's infrastructure, energy and water supply needs. Costain's order book reached a record £3.7bn, more than 90 per cent of which is comprised of repeat work. In infrastructure the group increased its order book by more than a fifth to £2.7bn. The group secured extensions and new work with Highways England, including two of the three lots of the A14 programme.
The delay of a number of projects in the North Sea may have also dragged on the performance of the natural resources division, but the business has benefited from contracts with water companies for the new AMP6 regulatory period. The group has commenced work for Thames Water, Severn Trent and Southern Water and management anticipates an increase in related revenue during the second half.
Broker Investec Securities expects adjusted EPS of 23.3p for the full year, down from 27.2p in 2014.
COSTAIN GROUP (COST) | ||||
|---|---|---|---|---|
| ORD PRICE: | 367p | MARKET VALUE: | £374m | |
| TOUCH: | 364-367p | 12-MONTH HIGH: | 369p | LOW: 264p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 108p* | NET CASH: | £127m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 529 | 5.8 | 5.8 | 3.25 |
| 2015 | 621 | 10.0 | 8.4 | 3.75 |
| % change | +17 | +72 | +45 | +15 |
Ex-div: 17 Sep Payment: 23 Oct *Includes intangible assets of £29.6m, or 29p a share | ||||
