The group’s latest financial figures cover the 12 months to 31 December 2008. In the previous period Costain’s profit of £20m came from turnover of £880m.
The latest profit margin of 2.3% is slightly higher than the 2007 figure of 2.2%.
David Allvey, chairman, said: "These results reinforce Costain's position as one of the most successful businesses in the UK's construction and engineering industry.
"Our increasing momentum is underlined by over ВЈ500m of new contract wins already secured in 2009.
“We have more work secured for 2009 at this point in the year than we did for 2008 at the comparable time last year.”
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Costain has re-aligned its operational structure into five divisions. Their contribution to turnover was:
£620m – civil engineering
£290m – building
£84m – oil, gas and process
£6m – international
£1m – property development
Before allocation of ВЈ6m of central costs, their contribution to group profit was:
ВЈ28m- civil engineering
£6m – oil, gas and process
loss of £2m – international
loss of £2m – property development
loss of £5m – building
Andrew Wyllie, chief executive, said: “We have benefited from the continued implementation of our 'Being Number One' strategy that deliberately focuses the business on major blue-chip customers.
“These large sophisticated organisations are seeking to work with fewer contractors on a longer term or partnership basis.
“We have targeted market sectors where we believe work will be undertaken because of its strategic significance to the nation - highways, water, waste, energy, health and education.
“Our brand, corporate values and reputation are hugely important to us. They have allowed us to attract quality customers, suppliers and people to enable us to achieve our growth.”
Costain’s year-end net cash position is £14m higher at £150m. During 2008, banking and contract bonding facilities were increased by more than 40% to £290m.
The forward orderbook is 25% higher at a record ВЈ2bn.
The figure includes ВЈ770m of work to be carried out in 2009.
“The level of tendering and estimating activity remains high, supporting our belief that our customers remain committed to their expenditure plans,” said Wyllie.
The supply chain has been rationalised – the number has fallen to around 3,000 which is a sixth of the level on the group’s database three years ago.
Civils – nuclear
Continued to build a presence in this sector, focussing on decommissioning opportunities and ultimately on securing work on the future new-build programme.
During the year, there was progress on major contracts including the Evaporator 'D' project at Sellafield and the Solid Active Waste Bunker Retrieval project at Hunterston.
Costain's coverage of the UK nuclear sites continues to strengthen with a framework contract at Trawsfynydd being supplemented with the award of the Magnox South framework at Berkeley and preparatory work at Hinkley.
Civils – water
Costain delivered 500 waste and water schemes for Yorkshire Water; achieved all of the delivery targets for Welsh Water; completed major schemes at Hornsey, Lane End, Wanstead and Beddington for Thames Water; and provided a diverse range of clean and waste water schemes for United Utilities.
Building
The strategy of trading the PFI portfolio in order to fund future opportunities resulted in the disposal of two PFI equity stakes, resulting in a combined profit of ВЈ3m.
There was “disappointing divisional performance” in the building division and provisions had to be made for additional costs on a small number of projects, in particular on one non-core residential project.
The result has been management changes, reduced overheads and better relationships with the supply chain. “We anticipate an improvement in performance in 2009,” said Wyllie.
The building division's year-end order book was down by 26% to ВЈ180m.
Overall, Costain’s cash inflow during 2008 ran to £23m, a rise of £3m on the previous figure of £20m.
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