Costain board takes 30% pay cut as Covid-19 closes sites

(Sharecast News) - Infrastructure specialist Costain has cut management salaries by a third in response to the coronavirus outbreak.
The firm, which derives over 95% of its revenues from government agencies or regulated businesses, said the current circumstances were having a "varied impact" on operations.

Critical services for highway, local authority and water company clients, which represent around 50% of revenues, have continued at "safe levels of operation", it said.

But in London, some sites have had to temporarily close, including Crossrail, HS2 and Thames Tideway contracts. On-site construction activities represent around 30% of group revenues.

The company has therefore moved to protect cash by reducing its cost base, deferring capital expenditure and agreeing a 30% reduction in the salaries for the board and senior management team, and for directors' fees, for up to three months.

Site workers will be furloughed, meanwhile, allowing Costain to access the government's job retention scheme and to ensure "immediate remobilisation" when circumstances chance.

Costain reiterated that the final dividend would not be paid, but a proposed capital raising of up to ?100m announced on 11 March is continuing to be progressed. The capital raising is fully underwritten by HSBC, Investec and Liberum on a standby basis.

Alex Vaughan, chief executive, said: "We are continually monitoring and implementing the necessary measures to safeguard those who continue to work on essential projects across the UK.

"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."

As at 1100 BST, shares in Costain were trading 7% higher at 38.45p.