The trend towards 'smart infrastructure' – using improvements in technology and data analysis to improve the capacity and efficiency of UK infrastructure – is creating opportunities that engineering group Costain (COST) is determined to exploit. It has, therefore, been investing heavily in hiring people with expertise in technology or consultancy, with numbers increasing 300 per cent in three years so that these specialist roles now account for around a third of its total workforce of 4,000 people.
Although Costain has one eye on future industry trends, the nuts and bolts of the business remain solid. Adjusted operating profit was up 18 per cent at £48.7m, although margins came under pressure in the infrastructure and natural resources divisions. The forward order book remained steady at £3.9bn – £1.1bn of which is designated for 2018. The net cash position grew thanks to cash collection towards the end of the year, but management warned this would reverse in 2018.
Analysts at Peel Hunt are forecasting adjusted pre-tax profit of £48m in 2018, giving EPS of 36.1p (from £43.4m and 34.8p in 2017).
| COSTAIN (COST) | ||||
| ORD PRICE: | 463p | MARKET VALUE: | £489m | |
| TOUCH: | 463-465p | 12-MONTH HIGH: | 495p | LOW: 388p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 146p* | NET CASH: | £188m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 1.00 | 12.9 | 17.6 | 11.5 |
| 2014 | 1.07 | 22.6 | 22.2 | 9.5 |
| 2015 | 1.26 | 26.0 | 21.8 | 11.0 |
| 2016 | 1.57 | 30.9 | 25.7 | 12.7 |
| 2017 | 1.68 | 38.9 | 31.1 | 14.0 |
| % change | +7 | +26 | +21 | +10 |
| Ex-div: | 12 Apr | – | – | – |
| Payment: | 18 May | |||
| *Includes intangible assets of £62.5m, or 59p a share | ||||
