Costain Regulatory News (COST)

Costain Group PLC

("Costain" or "the Group" or "the Company")

AGM trading update

Ahead of today's Annual General Meeting (AGM), Costain, the smart infrastructure solutions company, announces an update on trading including the impact of Covid-19 on the Group's operations.

Operational and trading update

Although the ongoing implications and impact of Covid-19 remain uncertain, we are pleased to be back working on site across substantially all of our operations. As a priority we continue to monitor and implement all necessary measures to safeguard our people and our stakeholders who are working on contracts 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.

Overall activity levels have increased since the beginning of the lockdown and have now stabilised. The activity levels vary across our sites as a result of the necessary Covid-19 safety measures implemented to protect our colleagues and our other stakeholders.

· The critical range of services to strategic highway, local authority clients and water utilities as well as our consultancy services across all our markets have continued to progress working to modified methods incorporating Covid-19 safety measures.

· Our on-site activities in London were more significantly impacted in order to ensure safe working conditions and travel, and current activity levels on these sites have stabilised and improved over the course of the second quarter.

· The overall level of activity in Q2 has been broadly as anticipated at the commencement of the lockdown in March and where necessary we are working with clients to change resource levels and programmes to meet their revised requirements as a result of Covid-19.

As previously announced, we have taken a number of actions to mitigate the immediate financial impact on the Group in Q2 through a combination of cost reduction measures and deferral of PAYE and VAT payments.

Successful fundraising and capital structure

On 29 May, Costain completed a £100 million capital raise which has significantly improved our financial position and provides us with a strong platform to capitalise on the opportunities resulting from the UK's positive infrastructure outlook. We are already benefitting from this improved financial position, with Costain winning a number of new contracts and framework awards since the fundraising was announced.

The Group has a net cash balance of £110 million, comprising £96 million of cash, £80 million share of cash in joint operations, and £66 million of drawn debt. In addition, the Group has £121 million of additional undrawn committed bank debt facilities available with a maturity date recently extended to 24 September 2023.

Order Book

The Group expects the order book to be approximately £4.2 billion at the half year end. The order book has benefitted from a number of contract wins and extensions in the first half which has replenished the volume of work completed. In addition, the order book has further upside potential from some significant framework agreements including the Highways England Smart Motorway Alliance. Recent contract developments include:

· Formal notice to proceed by HS2 on £3.3 billion programme

· One of six partners to Highways England's £4.5 billion Smart Motorway Alliance

· Awarded £210m contract to upgrade the A30 in Cornwall

· Partner on Anglian Water's £350m Strategic Pipeline Alliance

· A partner on Yorkshire Water's £51m Technical Services Framework

· A consulting contract for Thames Water for the programme management of its multi-million pound AMP7 capital programme.

· Programme Management contract for Bradford Council's Smart Street Lighting project

· Highways England Specialist Professional and Technical Services framework

Contracts update

On the A465 and Huntingdon and Peterborough contracts, discussions continue in seeking to resolve the commercial position including escalation through the use of the contractual dispute resolution process, where necessary.

Alex Vaughan, CEO of Costain, commented:

"We are pleased to be back on site across substantially all of our operations, with activity levels now stabilised. I am proud of how our business has transitioned to new ways of working safely and productively during this challenging period for all of our colleagues, clients, supply chain partners and communities.

"We are already seeing the benefit from our strengthened balance sheet with several new contract wins and framework awards. The impact of Covid-19 remains uncertain, however, Costain is well positioned to successfully navigate through the current environment and capitalise on the significant opportunities that the UK infrastructure market offers. We remain confident in the positive forward outlook for the business."

Costain will announce its interim results for the six months ending 30 June 2020 as scheduled on 19 August 2020.

ENDS

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Notes to editors

Costain helps to improve people's lives with integrated, leading edge, smart infrastructure solutions across the UK's energy, water, transportation 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: shaping our future infrastructure; 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