Costain facing fight to recover £49m on gas station job
Costain is holding nearly £50m in unpaid bills for work on an upgrade to gas compressor stations at Peterborough and Huntingdon.
The contractor agreed to part ways with National Grid on the job in June when work was more than halfway through.
A trading update this morning revealed that Costain will be fully off the job by the end of this month when works completed but not paid for will total £49.3m.
Costain said: “The Group continues to believe that it has a strong entitlement to recover this sum which is subject to successful pursuit through adjudication and potentially litigation.”
The £49.3m will be a one-off charge in 2020 results which could also be hit by arbitration results from the disputed A465 Heads of the Valley road contract.
The ruling is due before September 9 and Costain has moved its half-year results announcement to September 14 to accommodate that.
Costain said it expected to make an operating profit of £5.7m for the first half “before the A465 and Peterborough & Huntingdon contracts.”
It added: “In addition to working to resolve the issues with the A465 contract and the Peterborough & Huntingon contract, the Group has taken actions to address the type of risk arising from these contracts, including no longer pursuing Energy EPC contracts, focusing on long term investment programmes – not one off capital projects, and enhancing the strength of its overall contract management under the new Operational Excellence programme which is now in place.”
Alex Vaughan, Chief Executive Officer, said: “I am pleased to report that the underlying trading of the Group has been profitable in the first half despite the significant challenges resulting from Covid-19.
“All our activities are now operational, and I would like to pay credit to our team, our partners and clients who have been outstanding in their response during the pandemic.
“We now have a strong balance sheet, over £2 billion of contracts and frameworks secured and confirmed in the period and continue to have a growing pipeline of opportunities.
“I am confident that we are well placed to deliver significant growth in profit in 2021.”