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RNS Number : 9797V Costain Group PLC 20 August 2025
THIS ANNOUNCEMENT CONTAINS INFORMATION WITHIN THE MEANING OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK LAW BY VIRTUE
OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018
20 AUGUST 2025
COSTAIN GROUP PLC
("Costain", the "Group", or the "Company")
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2025 ("H1 25")
Increased operating profit, margin and forward work underpins confidence in FY
25 expectations
· Revenue of £525.4m (H1 24: £639.3m), with growth in Natural
Resources offset by a reduction in Transportation from expected Road project
completions and a rephased schedule from HS2.
· Quality of contracts and strong execution drives 3.1% increase in
adjusted operating profit(1) to £16.8m (H1 24: £16.3m) and a 70bps rise in
adjusted operating margin(1) to 3.2% (H1 24: 2.5%).
· Confident in delivery of adjusted operating margin run-rate target
of 4.5% during FY 25.
· Reported operating profit increase of 18% to £16.4m (H1 24:
£13.9m), reflecting a reduction in adjusting items following the completion
of the Transformation programme.
· Adjusted EPS of 5.5p (H1 24: 5.6p), with adjusted operating profit
increase offset by lower net finance income. Reported EPS of 5.4p (H1 24:
5.0p).
· Increased high quality forward work(2) position of £5.6bn (FY 24:
£5.4bn, H1 24: £4.3bn), more than four times FY 24 revenue, and bidding
activity levels remain high.
· Strong balance sheet, with net cash of £144.9m (FY 24: £158.5m,
H1 24: £166.0m), year-end net cash expected to be around £170m.
· Enhanced shareholder returns, with significant increase in interim
dividend to 1.0p (H1 24: 0.4p) reflecting normalisation of H1:H2 dividend
split and a further £10m share buyback programme launched in H1 25.
· Improved quality of earnings, business resilience and market
momentum drive confidence in delivery of FY 25 and medium-term expectations.
Financial summary
(£m unless otherwise stated) H1 25 H1 24 Change
Revenue 525.4 639.3 (17.8)%
Adjusted operating profit(1) 16.8 16.3 3.1%
Adjusted operating margin(1) 3.2% 2.5% 70bps
Adjusted profit before tax(1) 18.6 19.4 (4.1)%
Adjusted EPS(1) 5.5p 5.6p (1.7%)
Reported operating profit 16.4 13.9 18.0%
Reported profit before tax 18.2 17.0 7.1%
Reported EPS 5.4p 5.0p 8.0%
Dividend per share 1.0p 0.4p 150.0%
Net cash balance 144.9 166.0 £(21.1)m
Forward work position(2) £5.6bn £4.3bn £1.3bn
1. See notes 1 to 4 of the financial statements for adjusted metric
details and definitions, and reconciliation to reported metrics.
2. Forward work is the total of order book and preferred bidder book
which includes revenue from contracts which are partially or fully unsatisfied
and probable revenue from Water and other frameworks included at allocated
volume.
Alex Vaughan, Chief Executive Officer, commented:
"We have delivered another strong performance in the first half of 2025.
Growth in adjusted operating profit and margin reflects the improving quality
of our contract portfolio, and we remain confident that we will deliver our
adjusted operating margin run-rate target of 4.5% during FY 25, building on
the significant growth in adjusted operating profit achieved since FY 21. Our
strong net cash position, progression in our dividend and share buyback
programme are creating substantial value for shareholders.
"We continue to win new work and add new customers in growth markets that
provide essential infrastructure, expanding our forward work position to
£5.6bn, more than four times FY 24 revenue. We have already secured 90% of
our forecast revenue for the year and our bidding activity levels remain high.
"The Government's new Infrastructure Strategy and Infrastructure Pipeline,
together with recent regulatory determinations in water, energy and aviation,
provide clarity and confidence in the significant growth opportunities in our
target markets. We are delivering our strategic priorities, investing in the
business to support these attractive growth opportunities and are increasingly
confident in the Group's growth prospects."
Outlook
Following the greater clarity provided by the Government's commitments in its
recent 10-year Infrastructure Strategy and Infrastructure Pipeline, together
with the significant increase in committed regulatory investment in key
sectors of water, energy and aviation, there is real momentum in our chosen
markets of Transport, Water, Energy, and Defence and Nuclear Energy. Whilst we
remain mindful of the near term macro-economic and geopolitical environment
and the potential consequences of government spend phasing decisions, the
improvements in market outlook and the Group's positioning and resilience
underpin our confidence in delivering on our expectations for further progress
in FY 25 and FY 26, with a step change in performance expected in FY 27 and
beyond.
Enquiries
Investors and analysts matt.jones@costain.com (mailto:paul.sharma@costain.com)
Matt Jones, Costain +44 (0) 7860 922341
Financial media - Headland costain@headlandconsultancy.com (mailto:costain@headlandconsultancy.com)
Andy Rivett-Carnac +44 (0) 7968 997 365
Charlie Twigg +44 (0) 7946 494 568 (tel:+44%20(0)79%204649%204568)
Analyst & investor presentation
A live webcast of our results by Alex Vaughan (CEO) and Helen Willis (CFO)
will be at 9am on 20 August 2025. Please go to
https://stream.brrmedia.co.uk/broadcast/685559e3dd34f9001360ddd1
(https://stream.brrmedia.co.uk/broadcast/685559e3dd34f9001360ddd1) to register
for the event. This will be available for playback after the event on our
website at https://www.costain.com/investors/results-reports-presentations/
(https://www.costain.com/investors/results-reports-presentations/) .
We will also host a live presentation relating to results via Investor Meet
Company at 10am on 21 August 2025. Investors can sign up to Investor Meet
Company for free and register to meet Costain Group PLC via:
https://www.investormeetcompany.com/costain-group-plc/register-investor
(https://www.investormeetcompany.com/costain-group-plc/register-investor) .
Use of alternative performance measures
Throughout this release we use a number of 'adjusted' measures to provide
users with a clearer picture of the underlying performance of the business. To
aid understanding of the underlying and overall performance of the Group,
certain amounts that the Board considers to be material or non-recurring in
size or nature, or related to the accounting treatment of acquisitions, are
adjusted because they are not long term in nature and will not reflect the
long-term performance of the Group. This is in line with how management
monitors and manages the business on a day-to-day basis. These adjustments are
discussed in further detail in notes 1 to 4.
Person responsible
This announcement contains inside information. The person responsible for
this announcement at Costain is Helen Willis, Chief Financial Officer.
GROUP TRADING PERFORMANCE
Continued strong financial performance
We report both statutory results ('reported') and results excluding adjusting
items ('adjusted').
Revenue was £525.4m in H1 25 (H1 24: £639.3m), a 17.8% reduction on the
prior period. In Natural Resources, there was increased revenue in Energy and
Defence and Nuclear Energy, with stable revenue in Water. In Transportation,
there were revenue reductions in Road, due to the expected completion of
projects, and in Rail, due to the development of a new integrated programme
schedule for HS2 which is rephasing elements of our contracted activities in
the short term into future years. There continues to be growth in Integrated
Transport revenue, where we are benefitting from the expansion of our
framework agreements with Heathrow.
Adjusted operating profit grew by 3.1% to £16.8m (H1 24: £16.3m) and the
adjusted operating margin increased to 3.2% (H1 24: 2.5%), with increased
volumes and improved contract performance in Natural Resources partially
offset by lower volumes and margin in Transportation and increased investment
in targeted growth opportunities. Reported operating profit increased from
£13.9m in H1 24 to £16.4m in H1 25. Lower adjusting items of £0.4m (H1 24:
£2.4m) reflected £0.2m residual costs in respect of our Transformation
programme, which completed in 2024, and £0.2m of restructuring costs.
Net finance income was £1.8m (H1 24: £3.1m), reflecting lower interest
income from lower bank deposits and interest rates, and higher bank charges on
the accelerated amortisation of charges relating to our prior refinancing.
Adjusted profit before tax decreased 4.1% to £18.6m (H1 24: £19.4m).
Adjusted basic earnings per share (EPS) decreased 1.7% to 5.5p (H1 24: 5.6p),
with an increase in adjusted operating profit and a reduced share count
following the share buyback programmes offset by lower net finance income.
Reported profit before tax was up 7.1% at £18.2m (H1 24: £17.0m), while
reported basic earnings per share (EPS) was up 8.0% at 5.4p (H1 24: 5.0p).
Cashflow and liquidity
Cashflow from operations in H1 25 was a £13.0m outflow (H1 24: £21.4m
inflow), resulting from increased adjusted operating profit offset by the
timing of certain cash receipts around the period end and the unwind of
working capital. Free cash flow in H1 25 was an outflow of £3.0m (H1 24:
£14.2m inflow).
Our net cash position at the end of H1 25 was £144.9m (FY 24: £158.5m, H1
24: £166.0m). We expect our year end net cash position to be around £170m,
in line with our prior expectations after taking account of the £10m share
buyback programme announced on 16 June 2025, which has now completed, and
higher dividend payments.
During H1 25 we paid 97% of invoices within 60 days (H1 24: 97%). In January
2025 Costain was re-confirmed as one of the fastest-paying lead contractors in
construction on an average days-to-pay basis following the submissions to the
Government's Duty to Report on Payment Practices and Performance.
Dividend
In line with the Group's dividend policy, which targets dividend cover of
three times adjusted earnings, and the previously-stated intention to
normalise the H1:H2 dividend split in FY 25 back to a 33%:67% ratio, the Board
has declared an interim dividend of 1.0p per ordinary share for the six months
ended 30 June 2025, representing a significant increase on the FY 24 interim
dividend per share of 0.4p.
The interim dividend will be paid on 17 October 2025 to shareholders on the
register at the close of business on 12 September 2025. Payment of the interim
dividend will be both as a cash dividend and scrip dividend alternative.
Shareholders wishing to join the scrip dividend scheme should return a
completed mandate form to the Registrar, Equiniti, by 26 September 2025. The
scrip reference price will be announced on 18 September 2025.
Forward work position
Costain continues to enjoy good visibility on future work. Our forward work
position, which is our combined order book and preferred bidder book, stood at
£5.6bn at period end (FY 24: £5.4bn; H1 24: £4.3bn), representing more than
four times our FY 24 annual revenue. This forward work position is built on
long-term programmes that enable us to deliver a high consistency, continuity
and quality of work for our customers. As at the end of H1 25, it included no
single stage lump sum contracts and was predominated by target cost contracts
where the scope of work, design and cost are developed and agreed with the
client.
Our order book stood at £3.4bn at period end (FY 24: £2.5bn; H1 24:
£1.8bn). The preferred bidder book stood at £2.2bn at period end (FY 24:
£2.9bn; H1 24: £2.5bn). The preferred bidder book comprises contracts for
which we have been selected on frameworks where a further works order is
required prior to the works commencing. We note that some of our framework and
consulting revenue is not recorded in either our order book or preferred
bidder book, as it is undefined. This work is expected to represent an
increasing proportion of our future revenue.
As at the end of H1 25, we have more than £490m of secured Group revenue for
H2 25, meaning 90% of our forecast revenue for the year is secured.
Risk management
The accurate assessment and management of risk and uncertainty is central to
the successful execution of our strategic plans and our risk management
processes on contracts continues to ensure a robust operational and trading
performance. This is achieved through rigorous risk management and commercial
control throughout our operations in three key areas:
· A disciplined approach to contract selection, which includes robust
commercial and legal reviews, proactive shaping of procurement approaches with
our customers, and a rigorous multi-stage gating process.
· Commercial and operational assurance, which includes project level
controls, management oversight of forecasts, and cross-disciplinary contract
review meetings.
· Strategic supply chain partners, with application of robust supply
chain management processes.
Our strategy provides for assured delivery, lower risk contracts, together
with a broader business mix, and our ambition remains to deliver improving
long-term operating margins.
STRATEGIC PROGRESS
The Group provides solutions which transform the performance of the UK's
infrastructure ecosystem, creating a sustainable future for a more prosperous,
resilient and decarbonised UK. We are strategically well positioned in our
four key UK markets, where there is commitment to the long-term investment in
infrastructure: Transport, Water, Energy, and Defence and Nuclear Energy. We
build and grow strategic relationships with Tier 1 customers, forging
long-term partnerships, which support us in delivering our growth ambitions,
help us build an increasingly resilient customer portfolio and further extend
our service offering across the asset lifecycle. We continually identify and
deliver improvements to our approach to enhance productivity and drive
predictable best in class delivery, building on the work we have already
delivered through our Transformation programme. The Group made good progress
during H1 25 in building a high-quality, resilient business by executing on
its strategic priorities.
Growth in strong markets
We have increasing confidence that we are strategically well positioned in our
chosen long-term attractive growth markets of Transport, Water, Energy, and
Defence and Nuclear Energy, based on:
· The Government's recent ten-year Infrastructure Strategy and
Infrastructure Pipeline, providing greater clarity on £725 billion of
investment; and
· Regulated determinations in water, energy and aviation that have
resulted in significant increases in future investment in these sectors.
Predictable, best in class delivery
Safety is a key indicator of operational excellence and a core value for
Costain. We aim to eliminate harm across our business and our focus on safety
has seen us reduce injuries to industry-leading levels. We measure our safety
performance through our lost time injury rate (LTIR) which for H1 25 remained
low at 0.19 (H1 24: 0.09). Costain's LTIR is calculated as the ratio of the
total number of lost time incidents per every 100,000 hours worked.
We continue to improve the quality of infrastructure through the projects we
deliver for our customers to a high standard. Examples of predictable, best in
class project delivery in H1 25 include:
· We opened the M1 National Emergency Area Retrofit North programme
ahead of schedule, and opened our projects on the M6, A30 and A1 on time;
· We had a very positive close to AMP7, with our teams achieving 100%
compliance with our customers' regulatory date commitments across over 100
projects;
· We successfully completed the twin-bore Northolt Tunnel from West
Ruislip to Old Oak Common for HS2 safely and on schedule;
· We safely managed the complex demolition of the Allerdene bridge on
the A1 Birtley to Coal House project with no disruption to the busy East Coast
Main Line;
· Our Cadent team consistently achieved very high customer satisfaction
scores and have now supplied gas services to 27,000 homes and replaced 335
kilometres of gas mains network;
· We delivered to the highest safety and environmental standards the 15
Dock project to Babcock, comprising extensive upgrades to dock infrastructure
to enable Royal Navy submarines to undergo critical maintenance before
returning to sea; and
· Our M6 project team received the Gold award by the Considerate
Constructor Scheme for meeting the highest construction standards and making a
positive impact on the local community and environment.
Growing, resilient customer mix
Within our chosen markets we work with a growing number of Tier 1 customers
who choose to work with their partners on strategic five-to-ten-year
programmes of work. The strategic nature of these contracts allows us to build
strong, long-lasting, and valued relationships, broaden our service value and
allows us to maintain consistency and continuity of workflows over the
business plan period. This helps ensure a good quality of work and service,
and an optimal risk profile. During H1 25, we continued to build and expand
our broad customer base and increase the breadth of activities with both new
and existing customers, with examples including:
· Urenco: a programme delivery partner framework to deliver new
and upgraded infrastructure at its Cheshire site - Costain's first contract
with Urenco as it expands capacity as a key enabler for
the UK's decarbonised energy system;
· Urenco: an additional design services FEED for Europe's first
commercial scale high-assay low-enriched uranium facility;
· Sizewell C: a ten-year framework to provide engineering, project
delivery and quality control expertise to support the construction of the new
nuclear power station, expected to be one of the biggest net zero projects in
the UK;
· Anglian Water: further work won as part of the Strategic Pipeline
Alliance to deliver an additional 260 kilometres of strategic pipeline in the
east of England over the next five years; and
· Babcock, Heathrow and TfL: expansion of our work on existing
framework agreements to progress refurbishment of their critical
infrastructure.
Building a meaningful consultancy service
Our business is differentiated in seeking to meet our customers' broader
business needs - not just their capital infrastructure needs but also acting
as a consulting infrastructure partner, providing critical asset maintenance,
extending the life and optimising the performance of existing assets, advising
on long term asset planning and overseeing development programmes.
Consultancy services contributed 16.5% of H1 25 Group revenues. In addition to
the Urenco and Sizewell C awards noted above, during H1 25 we won consultancy
business with:
· Department for Energy Security & Net Zero, to provide technical
and strategic consultancy services on the Department's Energy and Net Zero
Professional Services Framework;
· National Highways, where we secured a place on the Specialist
Professional and Technical Services Framework 3 (SPaTs3) through the RIS3 road
investment cycle;
· Department for Transport, to provide technical and commercial advice
to develop a range of rail infrastructure enhancement projects in the Western,
Wales and Wessex regions;
· Storengy UK, to deliver two FEED contracts to support the development
of their underground hydrogen storage facility in Cheshire; and
· Further design commissions as part of our AMP8 water framework
agreements and Network Rail professional services framework agreement.
DIVISIONAL REVIEW
TRANSPORTATION
£m H1 25 H1 24 Change
Road 82.5 176.4 (53.2)%
Rail 184.7 240.6 (23.2)%
Integrated transport 48.9 27.3 79.1%
Total revenue 316.1 444.3 (28.9) %
Divisional operating profit 7.3 13.8 (47.1)%
Divisional operating margin 2.3% 3.1% (0.8)pt
1. All figures are on both a reported and adjusted basis. See
notes 1 to 4 of the financial statements for adjusted metric details and
definitions, and reconciliation to reported metrics.
2. Road and Rail in H1 24 includes revenue previously included
in Integrated Transport, reported within Road and Rail from the start of 2025.
· Revenue of £316.1m was down 28.9 %, reflecting lower volumes in
Road due to the scheduled completion of some contracts, and in Rail due to the
development of a new integrated programme schedule for HS2 which is rephasing
elements of our contracted activities in the short term into future years.
These decreases were partially offset by increased revenue in Integrated
Transport due to our expanding work with Heathrow.
· Divisional operating margin decreased by 0.8pt to 2.3%, due to the
above-mentioned lower volumes in Road and Rail together with increased
investment to support targeted growth opportunities.
· Revenue secured for H2 25 is £275.3m as at 30 June 2025.
Reflecting our transition towards a more broadly balanced portfolio, our
revenue in H1 25 was generated from our complex project delivery schemes for
HS2 and National Highways as well as from our work with newer customers such
as Heathrow and TfL and further activities in local government.
We are encouraged by the Government's ten-year Infrastructure Strategy and
Infrastructure Pipeline, which sets out plans to increase investment in
Transport (excluding HS2) in the medium term, notably in local and devolved
transport, together with the regulatory commitments to increase investment in
the aviation sector.
Road revenue declined by 53.2% in H1 25, as expected, driven by a reduction in
National Highways schemes revenue as certain projects complete or near
completion, partially offset by growth with TfL. As a strategic partner for
National Highways, we support their key investment programmes through the
Regional Delivery Partnerships (RDP) major projects frameworks, the Smart
Motorways Programme (SMP) Alliance, the Specialist Professional and Technical
Services (SPaTs) consultancy frameworks, and Area 14 highway maintenance
contract.
On RDP, in Cornwall we opened to traffic the widened A30 dual carriageway
between Carland and Boxheater, and our work to upgrade the A1 around Newcastle
continues to progress well. We are progressing the detailed design phase of
the M60 Simister Island scheme, which has been confirmed as being part of the
Infrastructure Pipeline, and we won a place on the SPaTs3 framework to provide
technical and engineering services through National Highways' RIS3 road
investment programme for the period 2026 to 2031.
Within the SMP Alliance, we completed the delivery of the M6 Junction 21a-26
smart motorway upgrade on time, and our work to support the National Emergency
Area Retrofit (NEAR) programme on the M1 through the design and delivery of 41
additional emergency areas for smart motorways opened ahead of schedule.
With TfL we increased the volume of work, progressing contracts at Gallows
Corner, Brent Cross and A40 Westway, and we continue to support TfL's CCTV
service.
Rail revenue decreased by 23.2% in H1 25, principally because of the
previously mentioned rephasing by the client of some of our work on the HS2
programme. During the period the last three of the four tunnel boring machines
(TBMs) in the Northolt Tunnel successfully completed their drives safely and
on schedule, a major milestone for the HS2 project as it completed the
twin-bore tunnel between West Ruislip and Old Oak Common. The HS2 programme
continues to be navigating a change in its programme delivery strategy with an
integrated programme being developed.
We continue to expand our portfolio of work for Network Rail and DfT through
our professional services consulting framework contracts with them.
Integrated Transport revenue increased by 79.1% in H1 25, mainly reflecting
the growing volumes at Heathrow, where we support both their H7 Terminal Asset
Renewal Partner (ARP) and Major Project Partner (MPP) frameworks. On the MPP
framework, we are making good progress upgrading the Terminal 2 baggage
handling facilities and systems, and on the ARP framework we are involved on
several key projects, such as replacing the cladding on the main road tunnel
in and out of the airport and refurbishing the landside host area inside
Terminal 2. We also continue to support other aviation customers at East
Midlands, Manchester and Stansted airports.
NATURAL RESOURCES
£m H1 25 H1 24 Change
Water 118.9 119.8 (0.8%)
Energy 29.6 21.7 36.4%
Defence and Nuclear Energy 60.8 53.5 13.6%
Total revenue 209.3 195.0 7.3%
Divisional operating profit 16.1 8.4 91.7%
Divisional operating margin 7.7% 4.3% 3.4pt
1. All figures are on both a reported and adjusted basis. See
notes 1 to 4 of the financial statements for adjusted metric details and
definitions, and reconciliation to reported metrics.
· Revenue increased by 7.3% to £209.3m, reflecting growth in Energy
and Defence and Nuclear Energy.
· Divisional operating profit increased to £16.1m (H1 24: £8.4m), and
divisional operating margin increased by 3.4pts to 7.7%, benefitting from
higher volumes, improved contract performance and successful contract
finalisations as we transition from AMP7 to AMP8 in Water.
· Revenue secured for H2 25 is £218.4m as at 30 June 2025.
Water revenue decreased by 0.8% in H1 25 as the water industry transitioned
from the AMP7 to AMP8 regulatory cycle. We provide a broad range of services
to improve asset and operational resilience across the Water sector, together
with decarbonisation capabilities. The breadth of our service offering to this
sector continues to grow with work including wastewater to gas, water quality
assurance and water treatment, as well as design, maintenance, capital
delivery and strategic resource options, such as the constructability advice
we are providing to Thames Water as part of the design of their new strategic
reservoir in Oxfordshire.
We had a very positive close to AMP7, achieving 100% of our regulatory date
commitments on behalf of our customers across over 100 projects, with Severn
Trent Water naming us as their top supplier across the whole of AMP7. Our
focus has now moved to the successful mobilisation of the AMP8 capital
delivery programmes for both existing AMP7 customers (Anglian Water, Severn
Trent Water, Southern Water and Thames Water) as well as our new AMP8
alliances with United Utilities and Northumbrian Water. We also have a managed
service provider contract with United Utilities and a professional services
contract with Yorkshire Water. Following our successful contract awards in FY
24 we have good visibility across 2025-2030 and continue to expect a doubling
of investment in AMP8 compared to AMP7, to over £100bn. This high level of
investment is expected to continue into AMP9, which runs from 2030-2035, as do
our contracts with United Utilities, Northumbrian Water and Southern Water.
Water resilience is a critical area of focus for the industry, and in June
2025 we announced a five-year extension to our Strategic Pipeline Alliance
contract with Anglian Water to improve resilience to drought and climate
change by transferring water from wetter regions to drier parts of the east of
England. During the period our work for Tideway, where in a joint venture we
are responsible for building the eastern section of London's new 'super
sewer', was commissioned and became operational, bringing significantly
greater environmental resilience to London.
Energy revenue increased by 36.4% in H1 25. We provide our customers in this
sector with a range of services including engineering design, managed services
and programme management, solving our customers' complex energy challenges
through excellence in engineering and delivery. Our strategic focus areas are
energy transition (hydrogen and carbon capture), energy resilience (brownfield
modifications for enhanced longevity and performance, energy storage and
carbon reduction) and energy connectivity (gas and electricity networks).
In energy transition, following the contract award in late 2024 we commenced
delivery of bp's landmark carbon capture and storage project on Teesside.
Building on our work with bp to design the East Coast Cluster hydrogen
network, we were awarded two FEED contracts with a new customer, Storengy UK,
for its pioneering underground hydrogen storage project in Cheshire. We also
continue to provide studies to Wales and West Utilities to assist them as they
develop their hydrogen vision. We see strong future growth in supporting the
decarbonisation of the UK's energy system through large-scale energy switching
engineering projects, including hydrogen generation and transportation.
In energy connectivity, we continue to manage the safety-critical gas mains
replacement programme for Cadent in the east of England, achieving very high
customer satisfaction scores. Now four years into our eight-year contract, we
have fitted new gas mains and services to 27,000 homes and replaced 335
kilometres of gas mains network across the region. Ofgem has a £80bn
investment programme planned for the RIIO-3 regulatory period from 2026 to
2031 to maintain critical gas networks and upgrade the UK's electricity grid,
thus ensuring greater resilience for the UK against volatile global energy
markets. This is four times the level of investment made during RIIO-2, with
the first £24bn tranche of this programme already having been approved, and
we continue to expect strong growth opportunities across the energy
transmission and connectivity market as the UK embarks on its 'Great Grid
Upgrade'.
Defence and Nuclear Energy supports several public and private sector
organisations in a variety of customer-side, delivery partnership roles across
the UK Defence Nuclear Enterprise. Revenue increased by 13.6% in H1 25, driven
by growth within our current delivery partnership roles for executive
non-departmental public and Government bodies, and with Tier 1 companies.
During the period we completed extensive upgrades to the dock infrastructure
at Devonport on behalf of Babcock, to enable Royal Navy submarines to undergo
critical maintenance before returning to sea.
We made significant progress in nuclear energy in the period, winning business
with both new and existing customers as this sector becomes an increasingly
important enabler of the UK's decarbonised energy system. We won a ten-year
framework with Sizewell C to provide engineering, project delivery and quality
control expertise to support the construction of the new nuclear power
station. Importantly, we also added Urenco as a new customer, first securing a
programme delivery partner framework to deliver new and upgraded
infrastructure at its Cheshire site and then following this with an additional
design services FEED for Europe's first commercial scale high-assay
low-enriched uranium facility. This facility will provide the fuel for the
recently announced small modular reactor (SMR) and advanced modular reactor
(AMR) units for Rolls Royce as part of Great British Nuclear's drive to
deliver cheaper, cleaner and more secure energy.
We continue to see further growth opportunities in Defence and Nuclear Energy,
are well positioned across the Defence Nuclear Enterprise, and our ambition is
to be the delivery partner of choice for the Ministry of Defence and its prime
contractors for its future strategic infrastructure needs.
FINANCIAL REVIEW
Divisional adjusted to reported reconciliation
Transportation Natural Resources Group
H1 25 H1 24 Change H1 25 H1 24 Change H1 25 H1 24 Change
Revenue £m
Reported 316.1 444.3 (28.9%) 209.3 195.0 7.3% 525.4 639.3 (17.8%)
Operating profit £m
Adjusted 7.3 13.8 (47.1%) 16.1 8.4 91.7% 16.8 16.3 3.1%
Adjusting items - - - - (0.4) (2.4)
Reported 7.3 13.8 (47.1%) 16.1 8.4 91.7% 16.4 13.9 18.0%
Adjusting items
We incurred £0.2m (H1 24: £2.4m) on residual transformation costs and £0.2m
restructuring costs.
Net finance income
Net finance income amounted to £1.8m (H1 24: £3.1m). Interest income from
bank deposits amounted to £2.6m (H1 24: £3.5m), reflecting lower interest
income from lower bank deposits and interest rates. The charges on banking
facilities and other similar charges were £1.1m (H1 24: £0.7m), reflecting
the accelerated amortisation of charges relating to our prior refinancing. In
addition, the net financial income for H1 25 includes the interest income on
the net assets of the pension scheme of £1.5m (H1 24: £1.3m) and the
interest expense on lease liabilities of £1.2m (H1 24: £1.0m) under IFRS16.
Tax
The Group has a tax charge of £4.0m (H1 24: £3.5m) giving an effective tax
rate of 22.0% (H1 24: 20.8%). The adjusted effective tax rate was 21.6% (H1
24: 21.3%). We expect the effective tax rate in FY 25 to remain marginally
below the blended statutory tax rate of 25%.
Cashflow
The Group generated an adjusted £3.0m free cash outflow in H1 25 (H1 24:
£14.2m inflow), lower than in the same period last year largely due to the
timing of certain cash receipts around the period end and the unwind of
working capital, partially offset by lower cash flows on adjusting items.
The Group had a net cash balance of £144.9m as of 30 June 2025 (FY 24:
£158.5m; H1 24: £166.0m) comprising Costain cash balances of £85.0m (FY 24:
£95.8m; H1 24: £96.2m), cash held by joint operations of £59.9m (FY 24:
£62.7m; H1 24: £69.8m) and borrowings of £nil (FY 24: £nil; H1 24: £nil).
During H1 25, the Group's average month-end net cash balance was £149.4m (FY
24: £169.8m; H1 24: £173.9m) and the Group's average week-end net cash
balance was £152.9m (FY 24: £164.3m; H1 24: £168.2m). Utilisation of the
total bonding facilities as of 30 June 2025 was £71.2m (FY 24: £65.3m, H1
24: £65.3m).
£m H1 25 H1 24
Cash from operations (13.0) 21.4
Add back adjusting items 0.4 3.3
Add back pension deficit contributions - 1.7
Add back / (less) cash flows on cash and cash equivalents - with restrictions 9.7 (6.2)
Less taxation - (1.9)
Less capital expenditure (0.1) (4.1)
Free cash flow (3.0) 14.2
£m H1 25 H1 24 FY 24
Cash and cash equivalents at the beginning of year 158.5 164.4 164.4
Net cash flow (13.6) 1.6 (5.9)
Cash and cash equivalents at the end of year 144.9 166.0 158.8
Borrowings - - -
Net cash 144.9 166.0 158.5
Bank and bonding facilities
On 28 May 2025, the Group announced that it had successfully concluded
negotiations with its bank and surety facility providers to refinance a new
four-year agreement of its bank and bonding facilities to September 2029, with
an option to extend by a further year. The Group's new facilities agreement
replaces the previous three-year facilities agreement to September 2026, as
announced on 26 July 2023, and comprises an £100m revolving credit facility
(previous revolving credit facility: £85m) and surety and bank bonding
facilities totalling £295m (previous facilities: £270m).
Pensions
Cash contributions made to the scheme during H1 25 amounted to £nil (H1 24:
£1.7m), reflecting the actuarial assessment of the scheme funding position
that was carried out as at 31 March 2024, which concluded that the funding
level (on a Technical Provisions basis) was more than 101%, in turn triggering
a pause in cash contributions from 1 July 2024 to 30 June 2025. The most
recent actuarial assessment of the scheme funding position, as at 31 March
2025, also concluded that the funding level was more than 101%, and so there
will also be no cash contributions into the scheme from 1 July 2025 to 30 June
2026.
The charge to operating profit in respect of the administration cost of the UK
Pension Scheme in H1 25 was £0.1m (H1 24: £0.1m). As at 30 June 2025, the
Group's pension scheme was in surplus in accordance with IAS 19 at £56.1m (FY
24: £54.9m surplus; H1 24: £55.1m surplus). The movement in the IAS 19
valuation, being a slight increase in surplus from 31 December 2024 to 30 June
2025, was due to a change in discount rate assumptions resulting in a decrease
in benefit obligations.
Capital allocation
Costain continues to perform well against its strategic targets and expects to
deliver long-term sustainable value for its stakeholders. The Group's capital
allocation priorities are:
· Investing for growth. Costain will continue disciplined investment in
key areas such as systems and digitalisation that will accelerate its business
transformation and expects to invest around £10m across FY 25 and FY 26 in
this area. It will also continue to prioritise investment in capabilities and
expertise to support targeted growth opportunities.
· Dividend. The Board recognises the importance of dividends for
shareholders and has been increasing the dividend payout since its resumption
in 2023. Dividend payments take into account the cash flow generated in the
period, and the impact of the current "dividend parity" arrangement relating
to the defined benefit pension scheme. The Board has a target dividend cover
of three times adjusted earnings, which provides headroom for further dividend
growth to achieve the target cover level as and when the current dividend
parity arrangement is no longer in place.
In line with the Board's dividend policy and the previously stated intention
to normalise the H1:H2 dividend split in FY 25 back to a 33%:67% ratio, an
interim dividend of 1.0p per share has been declared for the six months ended
30 June 2025, a significant increase compared to the prior period interim
dividend of 0.4p per share.
· Selective M&A. The Board retains optionality to pursue strategic
investments in technology, skills and capabilities to enhance our ability to
support customers.
· Returning surplus capital. After ensuring a strong balance sheet and
cash position, identified surplus capital will be returned to shareholders
through share buybacks or special dividends. On 16 June 2025 the Group
launched a £10m share buyback programme which completed on 15 August 2025.
This follows a £10m share buyback programme that was announced and completed
in H2 24.
DIRECTORS REPORT
Going concern
In determining the appropriate basis of preparation of the financial
statements for the six months ended 30 June 2025, the directors are required
to consider whether the Group can continue in operational existence for the
foreseeable future, being a period of at least twelve months from the date of
approval of the accounts. Having undertaken a rigorous assessment of the
financial forecasts, including its liquidity and compliance with covenants,
the Board considers that the Group has adequate resources to remain in
operation for the foreseeable future and, therefore, have adopted the going
concern basis for the preparation of the financial statements. Please see note
1 for more details.
Principal Risks and Uncertainties
The Directors consider that the principal risks facing the Group, including
those that would threaten the successful and timely delivery of its strategic
priorities, future performance, solvency and liquidity, remain substantially
unchanged from those identified on pages 52 to 55 of the Group's Annual Report
for the year ended 31 December 2024 which can be found at www.costain.com
(http://www.costain.com) .
There we define and describe the principal risks that are most relevant to the
Group including controls and key mitigating actions assigned to them. In
summary, the Group's principal risks and uncertainties are as follows: 1)
Safety, health, or environmental incidents 2) Securing work and responding to
changes in customer spending plans 3) Managing our contracts and economic
factors 4) Project set up, mobilisation and delivery 5) Procurement and supply
chain performance 6) Attracting, developing and retaining talent 7) Financial
resilience 8) Information security 9) Climate change and sustainability and
10) Delivering the benefits of our Transformation programme.
The Board reviews the status of all principal and emerging risks with a
notable potential impact at Group level throughout the year. Additionally, the
Board carries out focused risk reviews. These reviews include an analysis of
principal risks, together with the controls, monitoring and assurance
processes established to mitigate those risks to manageable levels.
Separately, the Audit and Risk Committee carries out a review of the risk
assurance framework and the effectiveness of risk management and internal
controls.
Statement of Directors' Responsibilities
The Directors confirm that these condensed consolidated half year financial
statements have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting', and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and that the interim management report includes a fair
review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
• an indication of important events that have occurred during the first
six months and their impact on the condensed set of financial statements, and
a description of the principal risks and uncertainties for the remaining six
months of the financial year; and
• material related-party transactions in the first six months and any
material changes in the related party transactions described in the last
Annual Report.
The current Directors of Costain Group PLC are listed in the Annual Report for
the year ended 31 December 2024.
For and on behalf of the Board
Alex Vaughan
Helen Willis
Chief Executive
Officer
Chief Financial Officer
19 August 2025
Cautionary statement
This report contains forward-looking statements. These have been made by the
directors in good faith based on the information available to them up to the
time of their approval of this report. The directors can give no assurance
that these expectations will prove to have been correct. Due to the inherent
uncertainties, including both economic and business risk factors underlying
such forward-looking information, actual results may differ materially from
those expressed or implied by these forward-looking statements. The directors
undertake no obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.
Shareholder information
There is a large amount of information about our business on our website,
www.costain.com (http://www.costain.com) . This includes copies of recent
investor presentations as well as London Stock Exchange announcements.
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2025
£m Note
H1 25 H1 24
unaudited unaudited
Revenue 4 525.4 639.3
Cost of Sales (473.5) (594.7)
Gross profit 51.9 44.6
Administrative expenses (35.5) (30.7)
Operating profit 16.4 13.9
Profit from operations 4 16.4 13.9
Finance income 5 4.1 4.8
Finance expense 5 (2.3) (1.7)
Net finance income 1.8 3.1
Profit before tax 18.2 17.0
Taxation 6 (4.0) (3.5)
Profit for the period attributable to equity holders of the parent 14.2 13.5
Earnings per share
Basic 7 5.4p 5.0p
Diluted 7 5.3p 4.9p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2025
£m H1 25 H1 24
unaudited unaudited
Profit for the period 14.2 13.5
Items that will not be reclassified to profit or loss:
Remeasurement of retirement benefit asset (0.2) (1.3)
Tax recognised on remeasurement of retirement benefit asset 0.1 0.1
Total items that will not be reclassified to profit or loss (0.1) (1.2)
Other comprehensive expense for the period (0.1) (1.2)
Total comprehensive income for the period attributable to equity holders of 14.1 12.3
the parent
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
£m Note 30 June 2025 31 December 2024
unaudited audited
Assets
Non-current assets
Intangible assets 9 50.6 51.2
Property, plant and equipment 10 32.3 35.3
Equity accounted investments 0.4 0.4
Retirement benefit asset 12 56.1 54.9
Trade and other receivables 2.4 4.3
Deferred tax 6.1 8.6
Total non-current assets 147.9 154.7
Current assets
Trade and other receivables 208.6 185.3
Insurance recovery asset 5.2 8.8
Income tax - 1.5
Cash and cash equivalents - with restrictions 11 28.7 38.4
Cash and cash equivalents 11 144.9 158.5
Total current assets 387.4 392.5
Total assets 535.3 547.2
Liabilities
Non-current liabilities
Trade payables 1.3 1.8
Lease liabilities 15.8 12.8
Total non-current liabilities 17.1 14.6
Current liabilities
Trade and other payables 256.5 271.0
Income tax 0.4 -
Lease liabilities 7.5 13.0
Provisions for other liabilities and charges 10.3 12.9
Total current liabilities 274.7 296.9
Total liabilities 291.8 311.5
Net assets 243.5 235.7
Equity
Share capital 13 2.7 2.7
Share premium 16.9 16.5
Translation reserve 0.6 0.6
Capital redemption reserve 13 136.5 136.5
Treasury shares (1.0) (0.7)
Retained earnings 87.8 80.1
Total equity 243.5 235.7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2025
£m
Share capital Share premium Translation reserve Capital redemption reserve Treasury shares Retained earnings Total equity
At 1 January 2024 138.3 16.4 0.6 - (1.9) 66.0 219.4
audited
Profit for the period - - - - - 13.5 13.5
Other comprehensive expense - - - - - (1.2) (1.2)
Issue of shares under employee share schemes 0.9 - - - (0.6) (0.2) 0.1
Shares purchased to satisfy employee share schemes - - - - 0.8 (0.8) -
Equity-settled share-based payments - - - - - 1.1 1.1
Acquisition of treasury shares - - - - (0.5) - (0.5)
Nominal value reduction (see note 13) (136.4) - - 136.4 1.2 (1.2) -
Dividends paid - 0.1 - - - (2.2) (2.1)
At 30 June 2024 2.8 16.5 0.6 136.4 (1.0) 75.0 230.3
unaudited
At 1 January 2025 2.7 16.5 0.6 136.5 (0.7) 80.1 235.7
audited
Profit for the period - - - - - 14.2 14.2
Other comprehensive expense - - - - - (0.1) (0.1)
Shares awarded to satisfy employee share schemes - - - - 0.7 (0.7) -
Acquisition of treasury shares - - - - (1.0) - (1.0)
Share buyback - - - - - (1.8) (1.8)
Equity-settled share-based payments - - - - - 1.8 1.8
Tax recognised on share-based payments - - - - - (0.4) (0.4)
Dividends paid - 0.4 - - - (5.3) (4.9)
At 30 June 2025 2.7 16.9 0.6 136.5 (1.0) 87.8 243.5
unaudited
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2025
£m Note H1 25 H1 24
unaudited unaudited
(as restated)*
Cash flows from/(used by) operating activities
Profit for the year 14.2 13.5
Adjustments for:
Finance income 5 (4.1) (4.8)
Finance expense 5 2.3 1.7
Taxation 6 4.0 3.5
Loss on disposal of property, plant and equipment 0.1 0.5
Depreciation of property, plant and equipment 10 5.3 5.8
Amortisation of intangible assets 9 0.6 0.1
Share-based payments expense 1.8 1.1
Cash from operations before changes in working capital and provisions 24.2 21.4
Increase in trade and other receivables (17.9) (14.4)
(Decrease)/increase in trade and other payables (16.8) 17.2
Movement in other provisions and employee benefits (2.5) (2.8)
Cash (used by)/from operations (13.0) 21.4
Interest received 3.6 2.5
Interest paid (3.1) (1.5)
Taxation paid - (1.9)
Net cash (used by)/from operating activities (12.5) 20.5
Cash flows from/(used by) investing activities
Additions to property, plant and equipment (0.1) (1.8)
Additions to intangible assets - (2.3)
Net cash used by investing activities (0.1) (4.1)
Cash flows from/(used by) financing activities
Ordinary dividends paid (4.9) (2.1)
Issue of ordinary share capital - 0.1
Acquisition of treasury shares (1.0) (0.5)
Repayments of lease liabilities (4.8) (6.1)
Net cash used by financing activities (10.7) (8.6)
Net decrease in cash and cash equivalents - with restrictions (9.7) 6.2
Net decrease in cash and cash equivalents (13.6) 1.6
Net (decrease)/increase in cash and cash equivalents (including cash with (23.3) 7.8
restrictions)
Cash and cash equivalents at beginning of the period (including cash with 11 196.9 188.8
restrictions)
Cash and cash equivalents at end of the period (including cash with 11 173.6 196.6
restrictions)
*See note 14 for more information on restatement.
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
Costain Group PLC ("the Company") is a public limited company domiciled in
England and incorporated in England and Wales.
This condensed consolidated interim financial report for the half year
reporting period ended 30 June 2025 has been prepared in accordance with the
UK-adopted International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. The interim report does not include all
of the notes normally included in an annual financial report. Accordingly,
this report is to be read in conjunction with the annual audited financial
statements within the Annual Report and Accounts for the year ended 31
December 2024, which has been prepared in accordance with the UK-adopted
International Accounting Standards and with the requirements of the Companies
Act 2006. Those accounts have been reported on by the Group's auditors and
delivered to the Registrar of Companies. The audit report for 2024 was (i)
unqualified and (ii) did not contain a statement under section 498(2) or (3)
of the Companies Act 2006.
The Group has applied the following standards and amendments for the first
time for the period commencing 1 January 2025:
• Lack of exchangeability - Amendments to IAS 21.
The amendment listed above did not have any impact on the amounts recognised
in prior periods and is not expected to significantly affect the current or
future periods.
Going concern
The Group's principal business activity involves work on the UK's
infrastructure, mostly delivering long-term contracts with a number of
customers. To meet its day-to-day working capital requirements, it uses cash
balances provided from shareholders' capital and retained earnings and its
borrowing facilities.
On 28 May 2025, the Group announced that it had successfully concluded
negotiations with its bank and surety facility providers to refinance a new
four-year agreement of its bank and bonding facilities to September 2029, with
an option to extend by a further year. The Group's new facilities agreement
replaces the previous three-year facilities agreement to September 2026, as
announced on 26 July 2023, and comprises an £100m revolving credit facility
(RCF) (previous RCF: £85m) and surety and bank bonding facilities totalling
£295m (previous facilities: £270m). The RCF is currently undrawn.
These facilities have a leverage covenant of net debt/adjusted EBITDA ≤1.5
times, an interest covenant of adjusted EBITA/net interest payable covenant of
≥4.0 times and a liquidity covenant whereby the aggregate of, without double
counting, any cash and cash equivalent investments and the available
commitment under the facility does not fall below £50.0m. These financial
covenants are tested quarterly. As at 30 June 2025, the Group had a leverage
covenant ratio of below zero (the Group had no net debt) and an interest
covenant ratio of 9.5 times. As part of its contracting operations, the Group
may be required to provide performance and other bonds. It satisfies these
requirements by utilising its £30m bank bonding and £265m surety company
bonding facilities.
In determining the appropriate basis of preparation of the financial
statements for the six months ended 30 June 2025, the directors are required
to consider whether the Group can continue in operational existence for the
foreseeable future, being a period of at least twelve months from the date of
approval of the financial statements.
In assessing the going concern assumption, the Board reviewed the Group's base
case plans for the period to 30 September 2026, being the first covenant
deadline more than 12 months after the approval of the financial statements.
The directors have assumed that the current RCF remains in place with the same
covenant requirements through to its current expiry date, which is beyond the
end of the period reviewed for Going Concern purposes. The base case assumes
delivery of the Board approved strategic and financial plans. As part of the
assessment, the Board also identified severe but plausible downsides affecting
future profitability, working capital requirements and cash flow. The severe
but plausible downsides include applying the aggregated impact of lower
revenue, lower margins, higher working capital requirements and adverse
contract settlements.
Both the base case and severe but plausible forecasts show significant
headroom and indicate that the Group will be able to operate within its
available banking facilities and covenants throughout this period.
Having undertaken a rigorous assessment of the financial forecasts, including
its liquidity and compliance with covenants, the Board considers that the
Group has adequate resources to remain in operation for the foreseeable future
and, therefore, the directors have adopted the going concern basis in the
preparation of the financial statements.
Alternative performance measures
Income statement presentation - Alternative performance measures
The Group discloses alternative performance measures, in addition to statutory
disclosures, to provide investors with supplementary information which may be
relevant to the Group's future performance. 'Adjusted profit' excludes
'adjusting items', which are significant items of income and expenditure that
the Board considers are incremental to business operations and do not reflect
the long-term performance of the Group. These adjusted measures are reconciled
to statutory disclosures, with the tax impact given, in note 3. Presenting
results on this basis is consistent with internal reporting to the Board.
Alternative performance measures do not have standardised meanings and,
therefore, they may not be comparable between companies.
The directors exercise judgement in determining classification as an
'adjusting item' using quantitative and qualitative factors. Consideration is
given, both individually and collectively, to the circumstances giving rise to
the item, its materiality and whether it is expected to recur.
'Adjusted profit' may exclude income and expenditure related to acquisitions,
discontinued operations, transformation costs, costs of a function or
sector-wide restructuring programme, claims and litigation, and impairments,
where the impairment is the result of an isolated, non-recurring event.
'Adjusted earnings per share' is calculated using 'adjusted profit'.
The Group also presents 'net cash/bank debt' and 'adjusted free cash flow' as
alternative performance measures in the front of the annual report. 'Net
cash/bank debt' is defined as cash and cash equivalents less interest-bearing
borrowings (excluding leases under IFRS 16 and net of unamortised arrangement
fees) and excluding 'cash and cash equivalents - with restrictions'. 'Adjusted
free cash flow' is defined as cash generated from operations, excluding cash
flows relating to 'adjusting items' and pension deficit contributions, less
taxation and capital expenditure and excluding cash flows related to 'cash and
cash equivalents - with restrictions'. The directors consider that these
measures provide useful information about the Group's liquidity position.
2. SIGNIFICANT AREAS OF JUDGEMENT AND ESTIMATION
The estimates and underlying assumptions used in the preparation of these
financial statements are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
The directors consider that the significant areas of judgement made by
management that have a significant effect on the Group's performance as well
as those estimates with a significant risk of material adjustment during the
second half of the year are unchanged from those identified on pages 152 to
155 of the Annual Report for the year ended 31 December 2024.
As at 30 June 2025, the HS2 programme continues to be navigating a change in
its programme delivery strategy with an integrated programme being developed
and work is underway on a revised programme with the supply chain, including
the Skanska-Costain-Strabag Joint Venture. Our 30 June 2025 financial result
reflects the current contractual position.
3. RECONCILIATION OF REPORTED OPERATING PROFIT TO
ADJUSTED OPERATING PROFIT
'Adjusted operating profit' and 'adjusted earnings per share' are presented as
non-GAAP alternative performance measures. The Board considers the adjusted
measures better reflect the underlying trading performance of the Group for
the reasons described in note 1.
The profit adjustments represent amounts included in the income statement. The
Group incurred £0.2m on residual transformation costs (H1 24: £2.4m on
Transformation) and £0.2m on restructuring costs.
Six months ended 30 June 2025
Adjusted Adjusting items Total
£m £m £m
Revenue 525.4 - 525.4
Cost of sales (473.5) - (473.5)
Gross profit 51.9 - 51.9
Administrative expenses before other items (35.1) - (35.1)
Residual transformation costs - (0.2) (0.2)
Restructuring costs (0.2) (0.2)
Administrative expenses (35.1) (0.4) (35.5)
Operating profit 16.8 (0.4) 16.4
Profit from operations 16.8 (0.4) 16.4
Net finance income 1.8 - 1.8
Profit before tax 18.6 (0.4) 18.2
Taxation (4.1) 0.1 (4.0)
Profit/(loss for the period 14.5 (0.3) 14.2
Basic earnings per share 5.5p 5.4p
Six months ended 30 June 2024 Total
Adjusted Adjusting items
£m £m £m
Revenue 639.3 - 639.3
Cost of sales (594.7) - (594.7)
Gross profit 44.6 - 44.6
Administrative expenses before other items (28.3) - (28.3)
Transformation costs - (2.4) (2.4)
Administrative expenses (28.3) (2.4) (30.7)
Operating profit 16.3 (2.4) 13.9
Profit/(loss) from operations 16.3 (2.4) 13.9
Net finance income 3.1 - 3.1
Profit before tax 19.4 (2.4) 17.0
Taxation (4.1) 0.6 (3.5)
Profit for the period 15.3 (1.8) 13.5
Basic earnings per share 5.6p 5.0p
4. OPERATING SEGMENTS
The Group has two business segments: Natural Resources and Transportation.
These segments are strategic business units with separate management and have
different customers or offer different services. Segmental information is
provided to the chief executive who is the chief operating decision maker. The
segments are discussed in the Strategic Report section of these financial
statements.
The Group evaluates segment performance on the basis of profit or loss from
operations before interest and tax expense and before 'adjusting items'. The
segment results that are reported to the chief executive include items
directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Other items are allocated to the operating segments where
appropriate but otherwise are viewed as Central costs.
Six months ended 30 June 2025 Transportation Central
Natural Resources costs Total
£m £m £m £m
Segment revenue
Total revenue 316.1 209.3 - 525.4
Segment profit/(loss)
Adjusted operating profit/(loss) 7.3 16.1 (6.6) 16.8
Profit/(loss) from operations before adjusting items 7.3 16.1 (6.6) 16.8
Adjusting items:
Restructuring and residual transformation costs - - (0.4) (0.4)
Profit/(loss) from operations 7.3 16.1 (7.0) 16.4
Net finance income 1.8
Profit before tax 18.2
Six months ended 30 June 2024 Transportation Central
Natural Resources costs Total
£m £m £m £m
Segment revenue
Total revenue 444.3 195.0 - 639.3
Segment profit/(loss)
Adjusted operating profit/(loss) 13.8 8.4 (5.9) 16.3
Profit/(loss) from operations before adjusting items 13.8 8.4 (5.9) 16.3
Adjusting items:
Transformation costs - - (2.4) (2.4)
Profit/(loss) from operations 13.8 8.4 (8.3) 13.9
Net finance income 3.1
Profit before tax 17.0
5. NET FINANCE INCOME/(EXPENSE)
£m H1 25 H1 24
Interest income from bank deposits 2.6 3.5
Interest income on the net assets of the defined benefit pension scheme 1.5 1.3
Finance income 4.1 4.8
Interest payable on banking facilities and other similar charges* (1.1) (0.7)
Interest expense on lease liabilities (1.2) (1.0)
Finance expense (2.3) (1.7)
Net finance income 1.8 3.1
*Other similar charges include arrangement and commitment fees payable.
6. TAXATION
£m H1 25 H1 24
On profit for the period
Current tax charge for the period (1.9) (0.9)
Deferred tax charge for the period (2.1) (2.6)
Tax charge in the consolidated income statement (4.0) (3.5)
£m H1 25 H1 24
Tax reconciliation
Profit before tax 18.2 17.0
Taxation at 25.0% (H1 24: 25.0%) (4.6) (4.2)
Adjustments in respect of prior years - 0.7
Permanent timing differences 0.6 -
Tax charge in the consolidated income statement (4.0) (3.5)
7. EARNINGS PER SHARE
The calculation of earnings per share is based on profit of £14.2m (H1 24:
£13.5m) and the number of shares set out
below.
H1 25 H1 24
Number Number
(millions) (millions)
Weighted average number of ordinary shares in issue for basic earnings per 265.4 273.2
share calculation
Dilutive potential ordinary shares arising from employee share schemes 2.0 2.9
Weighted average number of ordinary shares in issue for diluted earnings per 267.4 276.1
share calculation
8. DIVIDENDS
£5.3m dividends were paid or provided for in respect of the six months ended
30 June 2025 (H1 24: £2.2m).
9. INTANGIBLE ASSETS
Goodwill Customer relationships Other acquired intangibles Other intangibles Total
£m £m £m £m £m
Cost
At 1 January 2024 54.1 15.4 9.7 16.2 95.4
Additions - - - 5.8 5.8
Disposals - - - (7.6) (7.6)
At 31 December 2024 54.1 15.4 9.7 14.4 93.6
At 1 January 2025 54.1 15.4 9.7 14.4 93.6
Additions - - - - -
Disposals - - - - -
At 30 June 2025 54.1 15.4 9.7 14.4 93.6
Accumulated amortisation/ impairment
At 1 January 2024 9.0 15.4 9.7 15.6 49.7
Charge in year - - - 0.3 0.3
Disposals - - - (7.6) (7.6)
At 31 December 2024 9.0 15.4 9.7 8.3 42.4
At 1 January 2025 9.0 15.4 9.7 8.3 42.4
Charge in period - - - 0.6 0.6
At 30 June 2025 9.0 15.4 9.7 8.9 43.0
Net book value
At 30 June 2025 45.1 - - 5.5 50.6
At 31 December 2024 45.1 - - 6.1 51.2
Goodwill has been allocated to the applicable cash generating units of the
Transportation segment (£15.5m (H1 24: £15.5m)) and the Natural Resources
segment (£29.6m (H1 24: £29.6m)).
The Group reviews the value of goodwill and in the absence of any identified
triggering events, tests are based on internal value in use calculations of
the cash generating unit (CGU). The key assumptions for these calculations are
operating margins, discount rates and growth rates.
At 30 June 2025, the Group carried out a review of potential goodwill
impairment indicators or triggers in order to determine if a full impairment
review is required. No triggers were identified. As such, a full impairment
review of each CGU will be carried out as at 31 December 2025.
10. PROPERTY, PLANT AND EQUIPMENT
Right-of-use assets
Plant & equipment Leasehold improvements Land & buildings Vehicles, plant & equipment Total
£m £m £m £m £m
At 31 December 2024
Cost 8.0 8.2 15.9 28.4 60.5
Accumulated depreciation and impairment (7.7) (0.2) (4.3) (13.0) (25.2)
Net book value 0.3 8.0 11.6 15.4 35.3
At 30 June 2025
Cost
At 1 January 2025 8.0 8.2 15.9 28.4 60.5
Additions - 0.1 0.1 3.4 3.6
Disposals - - (1.5) (5.9) (7.4)
At 30 June 2025 8.0 8.3 14.5 25.9 56.7
Accumulated depreciation
and impairment
At 1 January 2025 7.7 0.2 4.3 13.0 25.2
Charge in period 0.1 0.5 0.9 3.8 5.3
Disposals - - (1.1) (5.0) (6.1)
At 30 June 2025 7.8 0.7 4.1 11.8 24.4
Net book value
At 30 June 2025 0.2 7.6 10.4 14.1 32.3
11. CASH AND CASH EQUIVALENTS
'Cash and cash equivalents' include the Group's share of cash held by joint
operations of £59.9m (FY 24: £62.7m).
'Cash and cash equivalents - with restrictions' represent amounts held in
trust bank accounts on behalf of certain customers (project bank accounts
(PBAs)) and designated for future payment to suppliers - see note 14 for
further information.
30 June 2025 31 December 2024
£m £m
Cash and cash equivalents - with restrictions 28.7 38.4
Cash and cash equivalents 144.9 158.5
Cash and cash equivalents (including cash with restrictions) 173.6 196.9
12. PENSIONS
The Group operates a defined benefit pension scheme in the UK; contributions
are paid by subsidiary undertakings. There are also two defined contribution
pension schemes in place in the UK and contributions are made both by
subsidiary undertakings and employees. The total pension charge in the income
statement is defined benefit scheme net income of £1.4m, and defined
contribution scheme operating costs of £6.8m (H1 24: defined benefit scheme
net income of £0.4m, and defined contribution scheme operating costs of
£6.1m).
Defined benefit scheme
The defined benefit scheme was closed to new members on 31 May 2005 and from 1
April 2006 future benefits were calculated on a Career Average Revalued
Earnings basis. The scheme was closed to future accrual of benefits to members
on 30 September 2009. A full actuarial valuation of the scheme was carried out
as at 31 March 2022 and this was updated to 30 June 2025 by a qualified
independent actuary. At 30 June 2025, there were 2,886 retirees and 2,601
deferred members (2024: 2,886 retirees and 2,601 deferred members). The
weighted average duration of the obligations is 11.0 years (2024: 11.0 years).
At 30 June At 31 December At 31 December
2025 2024 2023
£m £m £m
Present value of defined benefit obligations (486.5) (497.5) (542.6)
Fair value of scheme assets 542.6 552.4 596.1
Recognised asset for defined benefit obligations 56.1 54.9 53.5
Movements in present value of defined benefit obligations
At 30 June At 31 December
2025 2024
£m £m
At 1 January 497.5 542.6
Interest cost 13.3 25.0
Remeasurements - demographic assumptions (2.5) 0.5
Remeasurements - financial assumptions (6.8) (41.0)
Remeasurements - experience adjustments 1.5 3.7
Benefits paid (16.5) (33.3)
At end of period 486.5 497.5
Movements in fair value of scheme assets
At 30 June At 31 December
2025 2024
£m £m
At 1 January 552.4 596.1
Interest income 14.8 27.6
Remeasurements - return on assets (8.0) (39.9)
Contributions by employer - 2.0
Administrative expenses (0.1) (0.1)
Benefits paid (16.5) (33.3)
At end of period 542.6 552.4
Expense recognised in the income statement
H1 25 H1 24
£m £m
Administrative expenses paid by the pension scheme (0.1) (0.1)
Administrative expenses paid directly by the Group - (0.8)
Interest income on the net assets of the defined benefit pension scheme 1.5 1.3
1.4 0.4
Fair value of scheme assets
At 30 June At 31 December
2025 2024
£m £m
Global equities 89.2 90.0
Multi-asset growth funds 21.1 20.7
Multi-credit fund 83.7 83.8
LDI plus collateral 338.6 339.7
Cash 10.0 18.2
542.6 552.4
Principal actuarial assumption (expressed as weighted averages)
At 30 June At 31 December
2025 2024
% %
Discount rate 5.50 5.50
Future pension increases 2.80 2.95
Inflation assumption 2.90 3.10
Weighted average life expectancies from age 65 as per mortality tables used to
determine benefits at 30 June 2025 and 31 December 2024 are:
At 30 June 2025 At 31 December 2024
Male Female Male Female
(years) (years) (years) (years)
Currently aged 65 21.8 23.7 21.9 23.8
Non-retirees currently aged 45 22.4 24.7 22.9 25.1
In accordance with the pension regulations, a triennial actuarial review of
the Costain defined benefit pension scheme was carried out as at 31 March
2022. In June 2023, the valuation and updated deficit recovery plan were
agreed with the Scheme Trustee resulting in cash contributions of £3.3m for
each year commencing 1 July 2023 (increasing annually with inflation) until
the deficit is cleared, and an additional contribution so that the total
deficit contributions match the total dividend amount paid by the Company each
year. As part of the agreement, the Scheme funding position is assessed each
31 March and, if the funding level (on a Technical Provisions basis) is more
than 101%, contributions will stop for the following 1 July to 30 June. If the
funding level falls below 101% at the following 31 March, contributions will
resume for the next year starting 1 July to 30 June at the agreed new level.
An actuarial assessment of the Scheme funding position was carried out on 31
March 2025 and, as the funding level (on a Technical Provisions basis) was
more than 101%, contributions will stop from 1 July 2025 to 30 June 2026.
In addition to contributions being stopped for a year, as the funding level is
above 101%, "dividend parity" has been suspended for the period 1 July 2025 to
30 June 2026. Under the dividend parity arrangement, an additional matching
contribution (the excess of the total dividend above the Scheme contribution)
is paid to the Costain Pension Scheme when the total of the interim and final
dividends (or other return of capital such as a buyback) is greater than the
contributions paid into the Scheme in the previous Scheme financial year,
which runs from 1 April to 31 March.
The next triennial review of the Scheme with the Trustee, based on the
triennial actuarial valuation as at 31 March 2025, is underway and will be
completed before the end of June 2026.
Any surplus of deficit contributions to the Costain Pension Scheme would be
recoverable by way of a refund, as the Group has the unconditional right to
any surplus once all the obligations of the Scheme have been settled.
Accordingly, the Group does not expect to have to make provision for
additional contributions arising from this agreement in future financial
statements.
Defined contribution schemes
Two defined contribution pensions are operated. The total expense relating to
these plans was £6.8m (H1 24: £6.1m).
13. SHARE CAPITAL
H1 25 H1 24
Number (millions) Nominal value £m Number (millions) Nominal value £m
Issued share capital
Shares in issue at beginning of period - ordinary shares of 1p each (H1 24: 268.8 2.7 276.7 138.3
50p each), fully paid
Issued in year 4.2 - 1.8 0.9
Reduction in nominal value (transfer to capital redemption reserve) (0.1) - - (136.4)
Shares in issue at end of period - ordinary shares of 1p each, fully paid 272.9 2.7 278.5 2.8
The 2022 LTIP vested in the half-year and 3,800,000 shares were issued in
April 2025.
A total of 432,388 shares were issued under the Scrip Dividend Scheme during
H1 2025.
In June 2025, Costain announced an on-market share buyback programme. The
programme will be completed in H2 2025 and, as at 30 June 2025, it had
resulted in the purchase of 102,159 ordinary shares in aggregate for
cancellation.
The Company's issued share capital comprised 272,896,316 ordinary shares of
£0.01 each as at 30 June 2025. All shares rank pari passu regarding
entitlement to capital and dividends.
14. PRIOR PERIOD RESTATEMENT
The following restatement has been previously reported in the 2024 Annual
Report and Accounts. The effect on the H1 2024 financials is given below.
Cash and cash equivalents - with restrictions
For the year ended 31 December 2024, the Group changed the presentation of
amounts held in trust bank accounts on behalf of certain customers and
designated for future payment to suppliers. These were previously recognised
in the Group's balance sheet as a trade receivable from the customer depicting
that the cash is held in trust for the customer and does not represent the
Group's cash. The Group has re-presented these accounts as 'cash and cash
equivalents - with restrictions' and restated the comparative at 30 June 2024.
There is no impact on the profit and loss account. The statement of cash flows
has been restated to include these amounts and the in-period movements thereon
including a restatement to the movements in receivables. The opening cash
balance as at 1 January 2024 has also been restated in the statement of cash
flows. The comparative statement of financial position is reported at 31
December 2024 but the restatement at 30 June 2024, which has been used to
calculate the restatement of the statement of cash flows, is a decrease to
trade and other receivables and an increase in cash and cash equivalents -
with restrictions of £30.6m.
The effect of the restatement on the H1 2024 statement of financial position
is shown in the table below.
As reported As restated
H1 2024 H1 2024
£m £m
Cash and cash equivalents - with restrictions at 1 January - 24.4
Cash and cash equivalents - with restrictions at 30 June - 30.6
Trade and other receivables 168.7 199.3
15. EVENTS AFTER THE REPORTING DATE
Dividend
As reported above, an interim dividend of 1.0p per share has been declared for
the six months ended 30 June 2025.
Independent review report to Costain Group PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Costain Group PLC's condensed consolidated interim financial
statements (the "interim financial statements") in the Results for the six
months ended 30 June 2025 ("H1 25") of Costain Group PLC for the 6 month
period ended 30 June 2025 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Consolidated Statement of Financial Position as at
30 June 2025;
· the Consolidated Income Statement and the Consolidated Statement of
Comprehensive Income for the period then ended;
· the Consolidated Cash Flow Statement for the period then ended;
· the Consolidated Statement of Changes in Equity for the period then
ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Results for the six months
ended 30 June 2025 ("H1 25") of Costain Group PLC have been prepared in
accordance with UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Results for the six months
ended 30 June 2025 ("H1 25") and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the interim
financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Results for the six months ended 30 June 2025 ("H1 25"), including the
interim financial statements, is the responsibility of, and has been approved
by the directors. The directors are responsible for preparing the Results for
the six months ended 30 June 2025 ("H1 25") in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Results for the six months ended 30 June
2025 ("H1 25"), including the interim financial statements, the directors are
responsible for assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Results for the six months ended 30 June 2025 ("H1 25")
based on our review. Our conclusion, including our Conclusions relating to
going concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of this report.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this conclusion,
accept or assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
19 August 2025
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