Costain Share Discussion Threads

[sikhthetech] 23/8/2023 15:45

DD,

"could have been 3 weeks ago?"

Wrong, it was a 4 weeks ago today. Costain did announce the conclusion. Surely, as a holder you knew that?.



So over the past 4 weeks they haven't been able to work out the amount of dividend to pay?

They still thinking about it.
Really?

[disc0dave45] 23/8/2023 15:29

Refinancing their surety facilities only concluded last month (could have been 3 weeks ago?) and they've also said:"Any dividend in respect of the six months ended 30 June 2023 is subject to the expiry of the requisite notice to be given to the Group's bank and surety providers. Costain expects to announce the Board's decision on any resumption of an interim dividend payment shortly."Hence the delay in confirming the amount of the dividend.

[disc0dave45] 23/8/2023 15:10

Yep really.All the best chap :)Filter back on

[sikhthetech] 23/8/2023 14:59

DD,

"They simply haven’t agreed the amount of the payment/dividend yet!"

7 weeks since end of H1, they still discussing/thinking and the BoD don't know how much of that £132m net cash can be distributed?

Really???

[disc0dave45] 23/8/2023 14:53

"Resumption of dividend payments being progressed"They will pay a dividend - being progressed, Oxford DICTIONARY progressed:calculated or determined according to the technique of progression."Interim dividend payment under consideration by Board with announcement expected to be made shortly."They simply haven't agreed the amount of the payment/dividend yet!.

[disc0dave45] 23/8/2023 14:45

I see the builder basher is back, just loved this:... "according to my dictinary"PmslBack in the troll cage you go. Oh how's TLY working out for you? :)

[casholaa] 23/8/2023 14:30

Where do we stand? Do we want a divi this year or a buyback? I'm fine with either as the future is unknown. Would love a buyback this year and a divi next but not sure I can put up with the rollercoaster.

[catabrit] 23/8/2023 14:07

Sikh is about one silly comment away from being filtered again.

[sikhthetech] 23/8/2023 14:02

DD
"I didn’t read it as a “possible” dividend"

Well, according to my dictinary, "UNDER CONSIDERATION" means being thought about and discussed.

So they are still thinking about it.

Read the update.
;-)


from today's results:

"Interim dividend payment under consideration by Board with announcement expected to be made shortly."


In case you don't understand what "under consideration" means:

"being currently discussed or deliberated"

[catabrit] 23/8/2023 13:58

Agree Chris. Also, I expect special dividends and buybacks / tenders once the pension goes into surplus and they no longer have to match fund it. Clearly that’s why they’ve been unwilling to do a buyback & a dividend - because it would need to be matched by payments into the pension scheme. So once that matching element goes, I think we’ll see a decent slug of that net cash come our way.

[catabrit] 23/8/2023 13:55

Agree Disco. Dividend is highly (90%+) probable. Merely a timing thing re the announcement. They wouldn’t mention it and then say - nah, we’ve actually changed our minds! Bit annoying they didn’t sort it out prior but clearly there’s been some sort of technical problem that’s held them back from announcing one today.

[disc0dave45] 23/8/2023 13:51

I didn't read it as a "possible" dividend, they've stated it's being progressed so they will be re-introducing a dividend is my take on it. With so much cash on the BS they could do a div and a buyback!.

[chris magpie] 23/8/2023 13:26

Thought best fudge answer was on write down of Intangibles in Digital Operation. But Alex handled questions confidently and came over pretty well.
Key is to get Margin up they seem to have struggled to get more than 3% on Turnover for Donkey's Years interspersed with huge write downs on certain disastrous project like A465cand National Grid.
But if forecasts are correct and consultancy helps deliver greater margins things will be on the up and also happy to see cash doing well even if significant levels are in joint arrangements probably virtuallyl a massive chunk of the £50m in HS2

[sikhthetech] 23/8/2023 13:09

Catabrit,

"Alex hinted at some sort of process they have to go through during the presentation today."

There is a process, ensuring there's distributable reserves, which can be done by cancelling Share Premium account, requiring shareholder approval and a court order.
Why not state that instead of suggesting they 'thinking about it'.

[chelseamann] 23/8/2023 12:35

Yep....gotta admit it is very strange to announce a "possible dividend" why the hell could they not have arrived at a decision prior to issuing todays results. That uncertainty must be the reason behind this tiddly increase is share price today

[casholaa] 23/8/2023 12:13

I keep thinking that sikhthetech is Thags.

[catabrit] 23/8/2023 12:01

Hi Sikh. If you read the March full year results you’ll find that 80% of revenue was secured by end of Q1.

Also re divi - agree it’s a bit odd. Alex hinted at some sort of process they have to go through during the presentation today. I would have expected it to have been announced today with the results so maybe there’s a hiccup / some sort of process quirk behind the scenes that they’re close to resolving.

[sikhthetech] 23/8/2023 11:50

Catabrit,

"I don’t know many businesses outside of the alternative asset managers with that much revenue predictability. 90% of the revenue for the second half is already locked-in."

They are now coming towards end of Q3. Only Q4 left.

With only 3 months to go until year end, most businesses, especially those where projects take time to setup, would have a extremely high revenue predictability.


Divi:
Given they've announced the H1 results, it would have been better to just annoucnce a divi rather than saying they are thinking about it for the period which ended 7 weeks ago!!!

Why do they still need time to think about it?

"Given the Group's improved financial performance, strong net cash position and growth prospects, the Board is considering resuming dividend payments starting in respect of the six months ended 30 June 2023."

[catabrit] 23/8/2023 11:40

It is funny to see Costain mentioned in the Independent, the Evening Standard and This is Money. All because of the divi. Let’s see if it’s picked up by the FT!

[casholaa] 23/8/2023 11:34

Because us holders have been moaning and whining about divi's and now they want to give us a divi we're having second thoughts about strengthening the company and increasing eps and share price through buybacks lol

[this_is_me] 23/8/2023 11:18

I bought the shares because they were seriously undervalued

If the BOD agree that the shares are seriously undervalued why would they not prioritise buybacks over dividends? Institutions can buy some more shares when the price has dropped and sell some when the price has risen. That is not economic for private investors like me so in the long term buybacks when the price has fallen helps me grow rich (hopefully) slowly.

[catabrit] 23/8/2023 10:55

Yes fair DB and the FCF does tend to jump about a bit too much for my liking because of movements in working capital. But it’s up since I first bought shares and that’s how I measure it. Let’s see if it’s up a year from today!

I’d be amazed if Costain still exists on the public markets a year or two from now if the valuation continues to sit at net cash. Something will happen - either it becomes a value trap and something goes wrong and we’re all proven to be patsies or it gets properly valued and stays independent or it gets taken out.

Complex delivery requires the strong b/s and commands a low multiple. You’ve got to ask if it’s worth it. Fine if margins are stable and you’re only bidding for profitable work; it’s a bit like PE, not a business you run for scale. You run it for profit. Consulting has more scale and better margins and isn’t capital intensive. Alex also (rightly if I might add) pointed to the wider eco-system they can tap into vs peers if they focus on advisory work.

It will be interesting to see what happens. I don’t spend too much time looking ‘up’. Here I look down, feel safe and so keep climbing knowing the upside ought to take care of itself.

Looking forward to the Q&A tomorrow.

[catabrit] 23/8/2023 10:39

STM was but is now being taken private at a juicy premium :)

[dickbush] 23/8/2023 10:34

Catabrit, re your 3029, I wouldn't argue with any of your points except that the statement suggests net cash will be about the same at year end as at 30th June.

At a prospective 4.5 times earnings, net cash about the same as its market value, net interest now making a positive contribution to profits and likely to increase in the 2nd half, I do wonder why this hasn't been acquired.