Costain Share Discussion Threads

[dickiebird2] 21/5/2024 16:07

Strong finish looks good for tomorrow!!

[catabrit] 21/5/2024 10:29

Still my biggest position.

[dickiebird2] 21/5/2024 10:06

Be nice to break through the 85p level !!

[fft] 20/5/2024 13:13

No one is producing a source for the actuarial valuation . In a June 2023 RNS, the following statement was made "The Scheme funding position on a Technical Provisions basis as at 31 March 2022 was a deficit of GBP25.1m (a funding level of around 97%)."We are now 2 years later and I haven't seen a funding position statement for march 2023 or march 2024. Can anyone produce one because once the funding position is greater than 101% the company is not restrained by the dividend parity agreement. Page 42 of the AR last week.High interest rates have benefited many pension schemes and I see no reason why the costain pension scheme won't be similar.I could easily be missing something here, but if the dividend agreement isn't in play, the dividend can be 1/3 of the adjusted operating profit of 40m which would work out at 4.5p a share compared to 1.2p announced for 2023.

[chris magpie] 20/5/2024 10:31

Actuarial Valuation in March 2025 is where they are probably hoping to get to a surplus position. Then hopefully assuming profits for 2025 on target they can start to look at increasing dividends paid in 2026. As with all these big Sector companies one or two bad jobs can mess everything up but hopefully those bad old days are behind Costain now.

[dickbush] 20/5/2024 08:23

I have asked about buying back shares. It is included with dividends in equalling the payment to PF.

As I don't see an actuarial surplus any time soon, company's dividend restricted to one sixth of eps. IMO a negative for institutions. On the other hand, it must be an increasingly attractive acquisition.

[pinemartin9] 18/5/2024 07:25

With all this cash, and decent interest rates, presumably Costain is making some nice interest?Another thought, if the dividend is capped to match the pension payment, then if they bought shares back and cancelled them would that then also mean they could increase the dividend. This would have a double wammy impact of increasing the EPS and boosting the dividend payment.

[pinemartin9] 17/5/2024 20:01

This is being punished for the failings of the past. I believe its a different beast now, the market remains sceptical. Therein lies the risk and opportunity. Margins, pension, bad contracts have all pulled this down. The turnaround is underway but not yet believed by the market. There will come a time when Mr Market cottons on, at that point the share price will jump. If I was Kier, Balfour etc I'd be looking to buy Costain. The order book is wondrous.

[chris magpie] 17/5/2024 19:18

There doesn't seem to be an up to date one published. Last official was in March 2019 and Deficit was massive nearly £100m. The next official one should be March 2022 which is not published yet but was apparently less than £50m deficit. Should have better idea once they issue March 2022 Report..

[rimau1] 17/5/2024 18:50

Remember we have risen from the 50's not so long ago so its just consolidating here IMO. My only concern (and on

[pinemartin9] 17/5/2024 17:55

Good point. Surely this is tightly held? Has anyone sold any recently? We must start to believe our own hype, but the share price seems very comfortable with an 8 infront of it. We just need something to happen to pull in some new buyers and we should be off to the races.

[cerrito] 17/5/2024 17:21

Something that is interesting to me if no-one else is the stability of the shareholder register. Only 2 TR1-1's in the last 2 years.

[fft] 17/5/2024 01:49

Chris,Also on page 42 it says "In addition, if the funding level is above 101% as at 31 Marcheach year, then no Scheme contributions will be payable inrespect of dividend parity for the following year."Which appears to mean that next year they won't even have to pay the 3.3m and dividends won't be restricted as they are now past the 101% figure.Re. Your comment that the actuarial surplus isn't the same as the financial surplus mentioned in the AR (page 42 again). Have you any link or figures about the actuarial numbers ? There isnt any mention that I can see in AR about that.

[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.