Costain banks on critical projects to save 50% of revenue

Aaron Morby 2 months ago
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Costain this morning joined the swelling ranks of major contractors announcing 30% salary cuts for all senior directors.

Costain chief Alex Vaughan says critical projects will mitigate the worst impacts of the coronavirus crisis
Costain chief Alex Vaughan says critical projects will mitigate the worst impacts of the coronavirus crisis

The firm said its pipeline of critical projects, which account for 50% of group revenue, would soften the impact of the wider construction sites shutdown affecting much of the industry.

Costain said it was still continuing to work under more stringent safety procedures on highways, local authority and utility projects.

Alex Vaughan, chief executive officer, added that Costain had seen little or no change in demand for consultancy services to energy, defence and aviation, which represent up to 10% of annual revenues.

Costain said the hardest impact so far was on its London jobs where on-site construction has been paused on Crossrail, HS2 Enabling Works and Thames Tideway contracts, pending further review, at the request of clients.

He said that these on-site activities accounted for just under a third of revenues.

Vaughan said: “We are continually monitoring and implementing the necessary measures to safeguard those who continue to work on essential projects across the UK.

“Our priorities remain their safety and wellbeing, doing the right thing for society, continuing to support our clients and protecting the financial strength of the group.”

To safeguard jobs across the group Costain will make use of the Government’s job retention scheme, and will ‘furlough’ affected workforce, ensuring immediate remobilisation when conditions improve.

As of last week, Costain had £40m of cash, a £90m share of cash in project bank accounts and joint operations and £116m of drawn debt.

Vaughan added that Costain had a further £71m of bank debt facilities and the £100m writes issue that was announced earlier this month had been fully underwritten.

 

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