TIDMCOST
RNS Number : 1297I
Costain Group PLC
31 March 2020
31 March 2020
Costain Group PLC
("Costain" or the "Group" or the "Company ")
Update on COVID-19
Costain, the smart infrastructure solutions company, today
issues the following update on the impact of COVID-19.
COVID-19
In managing our response to COVID-19, we have four
priorities:
-- Doing the right thing for society;
-- Ensuring the safety and wellbeing of all our workforce,
supply chain partners, clients and the communities we work in;
-- Continuing to support our clients in the delivery of their critical national services; and
-- Protecting the financial strength of the Group.
All employees who can work from home are now doing so and have
the technology and capabilities to continue to service our clients.
For those who are recognised as essential workers providing
critical work on construction sites, we have put in place strict
measures to ensure their health and safety, which comply as a
minimum with the Government's prescriptive guidance as to social
distancing at work.
The impact and response to COVID-19 is uncertain and we remain
in active discussions with our clients to understand what work can
and should continue with the appropriate safety measures. Whilst
over 95% of our revenues are for government agencies or regulated
businesses, the current circumstances are having a varied impact on
our operations:
-- Where we provide a critical range of services to strategic
highway, local authority clients and to water utilities, we have
seen our activities continue at safe levels of operation. These
services represent c 50% of our annual revenues.
-- In our consultancy services to energy, defence and aviation,
which together represent c 10% of our annual revenues, we are
seeing little change in demand.
-- However, in London to ensure safe travel while social
distancing and where operational issues affect us, on-site
construction activities including on our Crossrail, HS2 Enabling
Works and Thames Tideway contracts have been paused, pending
further review, at the request of our clients. On-site construction
activities which have been paused represent c 30% of our revenues.
Home based activities which are continuing on these projects
represent c 10% of our revenues.
We remain well placed to benefit from the long-term opportunity
to address the UK's changing infrastructure needs once our
operations can fully resume.
Management actions and financial position
To mitigate the financial impact of COVID-19 and protect our
cash position during this period of disruption, we are implementing
a number of prudent actions including:
-- Making reductions to our cost base and deferring capital expenditure.
-- Taking advantage of the opportunity to defer PAYE and VAT payments.
-- The Board and senior leadership team have agreed a 30%
reduction in salaries and directors' fees for up to three
months.
To safeguard jobs across the Group we will make use of the
Government's job retention scheme, and will 'furlough' the affected
workforce, ensuring immediate remobilisation when conditions
improve.
The Board had already taken the decision not to pay a final
dividend in respect of the year ended 31 December 2019 at the time
of its results on 11 March 2020.
As at 26 March 2020, the Group had GBP40 million of cash, GBP90
million share of cash in project bank accounts and joint operations
and GBP116 million of drawn debt. In addition, the Group has a
further GBP71 million of bank debt facilities.
We will continue to monitor external events, manage the
situation closely and update the market as appropriate.
Update on capital raising
On 11 March 2020, the Group announced a proposed new capital
raising of up to GBP100 million (the "Capital Raising") to be
completed in the coming weeks. The Capital Raising is fully
underwritten by HSBC, Investec and Liberum on a standby basis. The
Board is continuing to progress the Capital Raising and a further
update will be provided in due course.
Annual General Meeting
The Company is considering how best to hold its 2020 Annual
General Meeting ("AGM"), which was due to be held on 7 May 2020,
due to the unprecedented and evolving situation with regard to the
global coronavirus outbreak.
We shall provide details regarding the AGM in due course. Our
priority is the health and safety of our shareholders, Directors,
employees, advisors and other people involved in the AGM.
Alex Vaughan, chief executive officer, commented:
"I would like to thank everyone who is supporting our business
through this challenging period and in particular all our workforce
who continue to work so professionally, as they always do, in
supporting each other and meeting our clients' critical needs.
"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.
"I am confident that the steps we are taking to manage our
business through this uncertainty will ensure we are well placed to
respond strongly once our operations can fully resume."
Ends
Enquiries:
Costain Tel: 01628 842 444
Alex Vaughan, Chief Executive Officer
Tony Bickerstaff, Chief Financial
Officer
Carolyn Rich, Investor Relations Director
Sara Lipscombe, Group Communications
Director
MHP Communications Costain@mhpc.com
Tim Rowntree Tel: 020 3128 8527
Peter Hewer Tel: 07709 326 261
Ollie Hoare Tel: 07824 142 725
Notes to Editors
Costain helps to improve people's lives with integrated, leading
edge, smart infrastructure solutions across the UK's
transportation, water, energy and defence markets. We help our
clients improve their business performance by increasing capacity,
improving customer service, safeguarding security, enhancing
resilience, decarbonising and delivering increased efficiency. Our
vision is to be the UK's leading smart infrastructure solutions
company. We will achieve this by focusing on blue chip clients
whose major spending plans are underpinned by strategic national
needs, regulatory commitments, legislation or essential performance
requirements. We offer our clients leading edge solutions that are
digitally optimised through the following five services which cover
the whole lifecycle of their assets: future-shaping strategic
consultancy; consultancy and advisory; digital technology
solutions; asset optimisation and complex programme delivery. Our
culture and values underpin everything we do.
For more information visit www.costain.com
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END
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