No legacy impact from troubled deal on half year results, says contractor
Talks between parties involved in the troubled Manchester Waste PFI contract are “making progress”, according to Costain.
Discussions between talks between the Greater Manchester Waste Authority and operator Viridor Laing have been going on for several months, after the authority ended its relationship with the latter in April.
Costain won work on the £400m scheme a decade ago but has suffered a series of losses and has been mired in carrying out snagging work at the 46 sites with completion now slated for 2019.
As it announced its first half results, the firm said: “Discussions are ongoing with the various parties in respect of the Manchester Waste PFI contract and progress is being made. Further announcements will be made as appropriate.”
The firm said there had been “no legacy impact” from the waste PFI contract on its natural resources division, compared to last year. This division, which covers water, power and oil and gas, narrowed losses to £1.1m compared to the £8.4m loss it racked up in the same period last year.
Costain said overall revenues at the business rose 9.5% year-on-year to £874.5m, with pre-tax profit up 39% to £15.7m.
The firm said its order book at the end of the first half stood at £3.7bn, down £200m on the same period last year.
Costain’s infrastructure division, its largest revenue and profit generator, saw turnover up 13% to £694.1m, with operating profits down 9% to £24.8m. Costain said it was continuing to target an operating margin of 4% to 5%.
Projects included the London Bridge station’s redevelopment for Network Rail, with completion expected early next year.
Meanwhile Costain said it planned to cease its involvement in a £350m marine and tunnelling works contract at Hinkley Point C nuclear power station once existing obligations, worth around £20m, were completed by the end of December.
Pointing to delays on the projects, the firm said it had worked “closely with [client] EDF through the £40m of early contractor involvement phase to date, [but] it was not possible to reach agreement on the final terms and conditions for the overall completion of the works”. Balfour Beatty will then take over to complete the major tunnelling project at the site.
Costain’s chief executive Andrew Wylllie said the business was “on course to deliver results for the year in line with the board’s expectations”.