London Bridge contract boosts contractor’s pipeline

Costain’s order book has pushed over the £2.5bn mark, thanks to its major win on the 5-year £400m London Bridge station overhaul.

In its full-year results, the contractor revealed it has also amassed a £140m war chest to fund growth through acquisitions.

In the year ended 31 December 2011, turnover fell 4% to £986m, from just over £1bn in 2010.

Pre-tax profit also fell 20% from £27.9m in 2010 to £23.2m last year. But Costain operating profit, which does not take into account exceptional items, increased during the year to 38%.

Costain’s finance director Tony Bickerstaff said pre-tax profit dropped because the company enjoyed an exceptional windfall of £11.2m in 2010 from the transfer of PFI assets to its pension fund.

Chief executive Andrew Wylie said that the contractor was on course to double profit in the middle term and the firm boosted dividend payouts to shareholders by 8%.

Costain said it was targeting longer term and higher margin contracts and growth for its support services business – which now accounts for a quarter of its order book.

Wylie said:  “We are developing the skills, capabilities and service offering necessary to meet the changing needs of our major customers.

“They are increasingly expecting Tier One suppliers to provide broad and bespoke solutions to their specific requirements by delivering an innovative service across engineering consultancy, construction, and operations and maintenance, through larger and longer-term bundled contracts.

“These skills enable us to engineer solutions to meet some of the country’s most complex and pressing national needs.”

Costain’s order book was £2.4bn in 2010.