It’s been quite a year for infrastructure specialist Costain (COST). A profit warning last June wiped off more than two-fifths of the shares’ value and this was followed by another profit downgrade in December. After the group revealed it had swung to a statutory pre-tax loss in 2019 and will be conducting a £100m fund raise, the shares plunged to an all-time low.
Adjusted operating profit of £17.9m was in in line with revised guidance, but it is a far cry from the £52.5m seen a year earlier. Project delays and cancellations knocked £16m off of profits while the unfavourable arbitration outcome over the A465 road project served a further £20m blow.
Excluding lease liabilities, net cash almost halved from 2018. The group blames lower liquidity on paying its suppliers more quickly and increased use of ring-fenced project bank accounts in joint ventures that tie up cash. The proposed equity raise aims to shore up the balance sheet and relieve working capital pressures. In the meantime, the final dividend has been scrapped.
House broker Liberum anticipates adjusted pre-tax profit of £27.4m and EPS of 20.6p in 2020, rising to £29.7m and 22.2p in 2021.
| COSTAIN (COST) | ||||
| ORD PRICE: | 95p | MARKET VALUE: | £ 102m | |
| TOUCH: | 93.7-95p | 12-MONTH HIGH: | 370p | LOW: 94p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | NA | |
| NET ASSET VALUE: | 146p* | NET CASH: | £34.9m** | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 1.26 | 26.0 | 21.8 | 11.0 |
| 2016 | 1.57 | 30.9 | 25.7 | 12.7 |
| 2017 | 1.73 | 41.8 | 31.1 | 14.0 |
| 2018 | 1.49 | 40.2 | 30.9 | 15.2 |
| 2019 | 1.16 | -6.6 | -2.7 | 3.8 |
| % change | -22 | - | - | -75 |
| Ex-div: | na † | |||
| Payment: | na † | |||
| *Includes intangible assets of £59m, **Includes £30m in lease liabilities, †No final dividend for 2019 | ||||
