Costain Share Discussion Threads

[chris magpie] 16/5/2024 18:39

Sadly way Pension Deficit is assessed bears no resemblance to figures in statutory accounts and is based on a more Conservative Actuarial Valuation. Another one of the vagaries of Finance how 2 Valuations can be so far apart. So in Financials in Surplus and Actuarial in Deficit.

[roguemale1] 16/5/2024 16:02

Hi fft, welcome aboard,
Yes all correct above, but the key is that dividends are limited to match the £3.3m pension contrib. If he wanted to pay a total divi of say £5m, he would have to match that into the pension.

Now as Chris said above, we expect news on this years review any time soon-I'm disappointed it wasn't today but hey ho. If they can agree with the trustees that the pensions looking toasty then he can up the divi (should that be what he wants to do).
Until then stuck at only £3.3m/year max.

If you look back at 2017 and 2018, the cost of the divi was over £15m/year...He has said that he wants 3x cover so that wont be seen again anyway but worth bearing in mind when you look at the M/Cap from those years-again as above.

Cheers

[justiceforthemany] 16/5/2024 15:43

Cash adjusted P/E here is 1.8
Yes <2!
73% of the market cap is net cash.

[fft] 16/5/2024 15:41

Looking at the AR page 42, it seems to indicate a seismic shift in the pension situation. Below is the relevant part On 30 June 2023, we announced that agreement has beenreached with the Trustee of the Company's defined benefitpension scheme on the 31 March 2022 triennial actuarialfunding valuation and ongoing contributions to the Scheme.The contribution plan from the Group to the Costain PensionScheme runs from 1 July 2023 to 31 March 2027 and is for apayment of £3.3m per year, payable in monthly instalments, whichwill increase in line with inflation (CPI) each 1 April. This replacesthe previous contribution plan to the Scheme, which from April2023 had increased to an annual payment of £11.98m paid inmonthly instalments.As a result of the new contribution plan, the full year 2023pension contribution payment by the Group was £8.1m, andpayments for 2024 and thereafter will be £3.3m annually,plus inflationary increases as outlined above.An assessment of the Scheme funding position will be carried outeach 31 March and, if the funding level (on a Technical Provisionsbasis) is more than 101%, contributions will stop from thefollowing 1 July to 30 June. If the funding level falls below 101%at the following 31 March, contributions will resume for the nextyear starting 1 July to 30 June at the agreed new level.As at 31 December 2023, the Group's pension scheme was insurplus in accordance with IAS 19 at £53.5m (H1 23: £58.7msurplus, FY22: £60.2m surplus).

[chris magpie] 16/5/2024 15:22

Cash excellent again. Not sure Pension deficit has been cleared yet when completed will improve the bottom line . As someone else mentioned just need to see some large contract awards for Rail and Highways Divisions.

[fft] 16/5/2024 14:40

Roguemale,If I understand correctly, the pension is now fully funded and since April 2023, they only need to pay 3.3m a year (down from 12m or so). If the pension is more than 101% funded then there is a pension holiday.In 2023 there was.8m pension payments so in 2024 with only 3.3m to pay that is 4.5m cash and profits gain.Having only recently joined the cost party (today!) I have read today's AR from the website (including all the notes), but need to catch up on the last 4-5 years to get a feeling for where it has been.

[greg the grinch] 16/5/2024 14:35

I suspect at some point COST will be making 5% on turnover and will have £250M+ in the bank........ SP?

[greg the grinch] 16/5/2024 14:31

Sittin and waiting.... medium term, both COST and SRC will get to £2.

[pinemartin9] 16/5/2024 12:35

A couple of juicy contract wins might pull in new buyers.

[roguemale1] 16/5/2024 11:14

Boystown-with respect the £1.94 was after the problem job news started and before the rights issue. When you go back further though your MC is about right for 2017 levels so £1.60 is a reasonable target with current shares in issue to get back to business as was. But they were paying a far greater divi then.
fft-It takes a long time to get off the naughty step and currently divi return is limited by the pension fund balance. It was disappointing that there was no mention of this today. They need to sort that and have a charm offensive with some funds and/or start buying back stock.

I am assuming that the pause at current levels is driven by people selling who bought in the 30's/40's. Once that clears alongside the buyback/increased divi whatever then we should see a rise past 100. IMHO.

rs

[pinemartin9] 16/5/2024 10:23

The value here is incredible. Some folk may be put off by the good share price performance in the last 12 months. However, this has plenty further left to go.

[amt] 16/5/2024 07:38

Well just on current turnover an extra 1% op income is 14m
So EPS if about 16p.
Pe ratio of 5.

[fft] 16/5/2024 07:23

Market cap 225m..... 150m in net cash. Free cash flow of 72m (net cash flow of 40m)Has the company given any indication as to what it intends to do with the cash ? I haven't checked but I could understand bonds/insurance/retentions etc for projects but nothing that would require that much. This seems undervalued. Is the market expecting a number of contracts to go wrong or be cancelled ?

[boystown] 16/5/2024 07:07

I thought (in post 2708) just over a year ago that 120p was a fairer valuation. But having just looked at everything again - my 'back of an envelope' guesstimate is now roughly twice where we're at. This isn't happening any time soon, of course, barring a bid anyway, but 160p equates to a mkt cap of £445m, which is still less than pre-pandemic (194p mid Feb 2020) and with underlying operating profit of >£40m on revenues of £1,332m, NTAV of £174m and the average net cash position as stated today, this certainly isn't demanding! I don't know what broker f/c are for this year - but I don't expect it will really matter as it will take a couple of years to reach my target.

[pinemartin9] 16/5/2024 07:06

Yes, and that average weekly cash position is set to continue to rise, what with the increased margins and swelling order book. They could be holding 250M plus of cash in 12 months, easily. Take over target, share buy backs, dividends, acquisitions. What do you do with that cash.Too much cash makes them a take over target.

[cerrito] 16/5/2024 06:44

They set a great example to other companies by telling us their average weekly net cash balances.

[thags] 16/5/2024 06:31

Unfortunately everyone is piling into meme stocks no one invests anymore just a market full of gambling addicts

[rimau1] 16/5/2024 06:27

I don't know i am a bit worried. Only GBP169m of net cash means we are trading on a smidge under 2x earnings lol

[this_is_me] 16/5/2024 06:22

A reassuring update that all is going to plan.

[someuwin] 16/5/2024 06:08

AGM Trading Update

Trading in Line with Board Expectations

Ahead of today's Annual General Meeting ("AGM"), Costain Group PLC ("Costain" or the "Group") announces an update on trading for the period 1 January 2024 to date.

Costain confirms that trading for the period is in line with Board expectations and the Group continues to have a high-quality forward work position that aligns with its strategic plans for both the Transportation and Natural Resources divisions.

Since the start of the year, contract wins include:

· bp's Net Zero Teesside Power and Northern Endurance Partnership joint ventures: to manage onshore CO2 gathering systems for the East Coast Cluster;

· Northumbrian Water: to help shape and deliver its strategic infrastructure upgrade programme (including AMP8) with the potential value of up to £670m to Costain during a 12-year period;

· Thames Water: award of a Design and Build contract to upgrade two strategic water treatment assets in Berkshire and Hampshire;

· Transport for London (TfL): two major road refurbishment projects at Gallows Corner Flyover and Brent Cross Interchange; and

· Two new framework contracts in the nuclear energy sector.

The average weekly net cash position from 1 January to 30 April 2024 was £168.8m (of which £60.4m was held in joint ventures). The average weekly net cash position for the same period last year was £122.9m (of which £57.2m was held in joint ventures).

The Group is in line to deliver its margin targets of an adjusted operating margin run-rate of 3.5% during the course of 2024 and 4.5% during the course of 2025. While the Board is mindful of the macro-economic backdrop, it remains confident in the Group's strategy and medium to long-term prospects.

As part of the AGM presentation, Costain will provide a short business update drawing on information published on 12 March 2024. There will be no new material information in the presentation further to that of 12 March 2024 and today's announcement.

[someuwin] 14/5/2024 12:24

New project aims to revolutionise tunnel infrastructure installation with robotic AI



14 May 2024

A consortium of mechanical and civil engineering, and robotic automation industry leaders, including Tunnel Engineering Services (UK) Ltd (TES), i3D robotics (i3D), the Manufacturing Technology Centre (MTC), Costain, and VVB Engineering, has developed the first robotic and AI solution set to revolutionise the installation of mechanical and civil services in tunnels.

Traditionally, installing these services in tunnels is hazardous, labour-intensive and time-consuming. The prototype Automated Tunnel Robotic Installation System (ATRIS) can autonomously select brackets, locate where they need to be mounted along a tunnel wall, and install them. In doing so, the automated solution can improve on-site health and safety by reducing the risks associated with manual labour at the tunnel work face, for example, working at height in confined spaces, and hand-arm vibration experienced by workers during installation.

Once fully-developed, the final system can be deployed in tunnel construction for a variety of sectors including transport, water and energy. It is expected to increase productivity by 40% due to faster installation, reduce installation costs for new mechanical and electrical (M&E) systems by 30%, and cut construction plant movements by 40% to decrease embodied carbon.

The 22-month project, partly funded by Innovate UK’s Smart grant, was led by TES, which developed the initial concept in partnership with the consortium. Leveraging its expertise in robotics and automation, MTC spearheaded the design and manufacture of the robot's end effectors. i3D developed crucial visualisation software for precise navigation, whilst Costain and VVB provided industry knowledge and expertise in tunnelling and fit-out requirements.

Alan Worsley, Design and Project Manager at Tunnel Engineering Services (UK) Ltd said: “TES has over many years designed and manufactured Mechanised Tunnelling Machines and special purpose equipment for the construction industry. Over this time, innovation has been at the forefront of our business, and the need for automation in traditionally manual M&E fit-out techniques has led us to develop ATRIS and make it commercially viable for the market. We believe the system can offer a safer, more cost-effective and sustainable solution for future infrastructure projects.”

Steve Nesbitt, Chief Technologist for the Built Environment at MTC, said: “Like many sectors, construction has faced labour challenges over the past few years which has driven greater interest in using robots, beyond manufacturing and logistics, to address these issues. By contributing our expertise to this project, we are paving the way for construction companies to adopt technology for greater control and structuring of on-site works, making infrastructure delivery safer, more productive, and more sustainable.”

Dr Jon Storey, Lead Engineer at i3D, said: “Developing an automated system to install infrastructure in tunnels has been a long-standing ambition for the construction sector. ATRIS has moved us significantly closer to that goal. The use of stereo vision with machine learning and robotics to place bolts precisely on a curved surface is an unprecedented achievement, with potential applications beyond the construction sector, such as nuclear decommissioning and defence.”

Lee Bateson, Mechanical and Engineering Manager and Robotics Lead at Costain, said: “Teaching the robots to learn seemingly simple tasks – such as how to avoid cross-threading the screws that go into the sockets – has been hugely fulfilling, thanks to the consortium’s collaborative spirit. Whether it’s carbon reduction, increasing productivity or improving workforce health and safety, this is transformative technology that will have enormous benefits for the customers that we build tunnels for.”

Nicholas Beedle, Group Operations Director at VVB Engineering, said: “Tunnel works historically are expensive to build and maintain, and in the higher risk bracket for safety during construction and operation. It is important that ongoing improvements are made to address both of these issues. The development of the robotic AI solution is a step towards solving both of these industry challenges.”

hxxps://www.costain.com/news/news-releases/new-project-aims-to-revolutionise-tunnel-infrastructure-installation-with-robotic-ai/

[rimau1] 14/5/2024 08:44

Costain usually provide a brief trading update at the AGM so expect news Thursday. Suspect a quite vanilla started well, trading in line.

[xamf] 10/5/2024 22:27

I've taken advantage of the relatively weak share price today to top up on Costain. It is now my largest holding.

Kier has had a very good run of late relative to Costain and they now have the same low forward PE of 6.8. I love both stocks and hold both long term. However it's now time for Costain to motor on! It has a lower PEG (0.3 against 1.0) and of course sizeable net cash reserves. I note too that COST have their AGM this Thursday (16th May) and we'll get a trading update at some point.

[someuwin] 09/5/2024 18:48

Costain selected by Thames Water to upgrade key treatment sites

9 May 2024



* Upgrade to sewage treatment works will transform the lives of local communities in Sandhurst and Selborne.

Costain, the infrastructure solutions company, has been awarded a design and build contract with Thames Water to upgrade two strategic treatment assets in Sandhurst, Berkshire and Selborne, Hampshire.

The award, valued at more than £5m for the two sites, will see Costain support Thames Water’s upgrading of wastewater treatment assets as part of its Wastewater Asset Assurance Programme (WAAP). The schemes are the first that have been awarded to Costain as part of a wider investment programme for sewage treatment sites (STWs). This could see up to 25 similar projects allocated to Costain to create cost-efficient infrastructure solutions for Thames Water.

The planned construction will involve implementing flow monitoring technology to validate flow-to-full treatment for wastewater before it is discharged, upgrading the existing screening operations at the inlet station, improving storage tank capacity and revising the storm return pumping systems. The work will improve the ability of both sewage treatment works to treat the increasing volumes of incoming sewage, reducing the need for untreated discharges in wet weather. The schemes are due to complete in 2025.

Thames Water is currently undertaking its largest ever upgrade of sewers and STWs, with plans to improve more than 250 sites in the coming years as part of a £1.12bn investment in its wastewater sites.

Gerard Shore, water director at Costain, commented: “Thames Water is investing in river health and has a clear plan to upgrade hundreds of treatment plants across the region. This will have a transformative impact on the lives of residents and local communities. We know we can add considerable value by identifying further opportunities at the outline design stage to maximise efficiencies for the upgraded treatment infrastructure. This will help ensure that these assets are fit for purpose for the long term.”

Andrew Popple, director of delivery at Thames Water, added: “We have an excellent track record of working with Costain and we are looking forward to collaborating with them once again for this work.

We operate in a changing environment, with a population that is growing in many areas, so we continually monitor the potential need for upgrades at our STWs.”

The news follows Costain’s appointment by Northumbrian Water to its AMP8 strategic infrastructure framework that could see contracts with the potential value of £670m awarded to Costain over the 12-year period. In 2023, Costain extended into AMP8 its Managed Service Provider contract with United Utilities and its consultancy work with Yorkshire Water. Costain has also won funding from Ofwat to support innovation projects.

[hamhamham1] 09/5/2024 16:41

Depends if you think the share price is going to 180p area, as I do. £500m market cap is about right for here.