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Costain Group

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Costain Group plc
Company typePublic limited company
LSE: COST
IndustryConstruction, civil engineering
Founded1865
HeadquartersMaidenhead, England, UK
Key people
Paul Golby, Chairman
Alex Vaughan, CEO[1]
RevenueDecrease £1,332.0 million (2023)[2]
Decrease £26.8 million (2023)[2]
Decrease £22.1 million (2023)[2]
Websitewww.costain.com

Costain Group plc is a British construction and engineering company headquartered in Maidenhead, England.

It was established by Richard Costain and Richard Kneen in 1865, initially operating as builders in and around Lancashire. During the early 20th century, Costain expanded geographically, its main activities comprising housebuilding and mining. A separate London-based company was formed in 1923 by the Costain family and was floated on the London Stock Exchange ten years later. Shortly thereafter, Costain moved into civil engineering activities, such as its work on the Trans-Iranian Railway. During the Second World War, Costain helped build several Royal Ordnance Factories, airfields, and worked on the Mulberry harbour units.

By the start of the 1970s, Costain was building around 1,000 houses per year. During this decade, it benefitted greatly from a construction boom in the Middle East; profits increased from little more than £1m per year to £47m within a decade.[3] During the 1980s, Costain invested its resources into coal mining, international housing and commercial property; however, both the housing and property markets, and thus the business, were heavily impacted by the early 1990s recession, which led to sell-offs and cutbacks, especially housebuilding, which reoriented Costain towards the construction sector. Despite the company's fiscal difficulties, it (as part of the TransManche Link consortium) completed construction of the Channel Tunnel, which was at the time the most expensive construction project ever proposed at a final cost amounted to £9 billion (equivalent to £22.6 billion in 2023). Into the 21st century, it has worked on numerous complex civil engineering and commercial construction projects and has been involved in various Private Finance Initiative (PFI) schemes.

Costain's operations have occasionally been a subject of controversy. It used to be a subscriber to the United Kingdom's Consulting Association, which was an illegal construction industry blacklist; legal action was taken against the company in this matter during the 2010s. In 2019, Costain was suspended from the UK Government's Prompt Payment Code after failing to pay suppliers on time.

History

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19th century

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The business was founded in 1865 when Richard Costain and his future brother-in-law, Richard Kneen, left the Isle of Man and moved to Liverpool as jobbing builders. Their partnership lasted until 1888, at which point Richard Kneen left and Richard Costain's three sons (Richard, William and John) joined him.[3] Costain gradually expanded through Lancashire; by the outbreak of the First World War, it was building its presence in South Wales, where it built numerous houses for munitions workers.[4]

20th century

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Following the First World War, Costain began to develop housing estates in Liverpool on its own account, primarily to offer continuity of employment to its workforce.[5] With housing sites in Liverpool in short supply, Richard Costain sent his son William down to London to find new sites. He purchased the Walton Heath Land Company, and in 1923, the separate business of Richard Costain & Sons was formed.[3]

Several executive estates in the Croydon area were developed in the middle of the 1920s. In 1929, William died: the other two brothers remained in Liverpool and William’s son, Richard Rylandes Costain, was sent to run the London company. Under him, Richard Costain & Sons expanded its housing building large estates all around London, the largest being a site for 7,500 homes in South Hornchurch, started in 1934. Perhaps the best known development of all was Dolphin Square, which was completed in 1937.[3]

During 1933, Richard Costain (the London-based business) was floated on the London Stock Exchange; the Liverpool business was not part of the flotation. By then, Costain had completed over 4,000 houses in the London area, some at prices up to £4,000.[6] Costain continued to expand its private housebuilding and it was described as "one of the largest speculative housebuilders and estate developers in this country before the war."[7]

Following the flotation, Costain moved into civil engineering. One such early undertaking in this area was on the Trans-Iranian Railway and then at Abadan, Iran for BP.[8] Losses on the railway, on Beckton sewage works and the costs of Dolphin Square caused financial problems, and Costain had to look for alternative funds when Barclays withdrew its overdraft facilities.[5] By 1939 the company was on Heath Drive in Tadworth in Surrey, when Arthur Costain was the chairman.[9]

Throughout the Second World War, Costain undertook extensive military work, including the construction of Royal Ordnance Factories and airfields. One particular highlight of its wartime activities was serving as one of the contractors who built the Mulberry harbour units.[10][11]

Sir Richard Rylandes Costain CBE (20 November 1902 - 26 March 1966) was chairman in the 1950s, the grandson of the founder.[12][13]

In the immediate post-war years, only small estate development was undertaken by the firm; it was not until the acquisition of Nottingham-based Rostance Group in 1962 that private housebuilding resumed on any scale.[3] Further bolstered by the acquisition of the Blackpool firm R Fielding in 1969, Costain was building around 1,000 houses per year by the beginning of the 1970s.[3] The substantially increased revenues that accrued to the oil producing states led to a construction boom in the Middle East during the 1970s. Costain was a major beneficiary, particularly in the Emirates, and within a decade profits increased from little more than £1m a year to £47m.[3]

In the 1960s, A. P. Costain became chairman, with Sir Robert Taylor as chief executive.[14]

During 1985, Costain was part of the TransManche Link consortium that constructed the Channel Tunnel, which was at the time the most expensive construction project ever proposed, the final cost amounted to £9 billion (equivalent to £22.6 billion in 2023).[15][16]

During the 1980s, recognising that exceptional Middle East profits could not continue, Costain sought to redeploy its extensive cash balances into coal mining, international housing and commercial property. However, over expansion in the end of the 1980s led to high gearing just as international markets were turning down; this circumstance was exacerbated by a disastrous explosion which killed ten people in 1989 at a Costain owned coal mine in the United States, for which the firm was fined $3.75m in February 1993.[17]

As a consequence of the early 1990s recession, the company incurred substantial losses that not only rapidly depleted its reserves but also compelled the sale of several key assets along with various cutbacks, particularly in its underperforming housebuilding division, that left Costain as a predominantly construction-oriented business.[3][18][19] More fiscal strain came in the form of a combined charge of £160m that was incurred by a pair of rights issues that arose in 1991 and 1993.[20] Nevertheless, some sectors, such as coal mining, continued to provide reliable work for Costain at this time.[21]

During a dramatic low point in April 1995, the demise of Costain was incorrectly predicted by numerous British broadsheets. It was claimed that the company could not be expected to survive as an operating company by the end of the century.[20] In 1995, Alan Lovell was appointed chief executive of Costain; the actions taken during his two year tenure, which included the sale of the company's property interests in London and the acceptance of a £73m refinancing arrangement that gave the Malaysian building group Intria a 40 percent stake in the business, have been credited with having saved Costain.[22][23] On two occasions in 1996, the company had its shares suspended.[24]

During 1999, Brewer Gold Mine, an American subsidiary of Costain, abandoned a gold mine in South Carolina, which had been closed, and ceased performing its remediation duties.[25]

21st century

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In the early years of the 21st century, Costain worked on the Channel Tunnel Rail Link, which included the modernisation of London St Pancras station to accept Eurostar trains,[26] and on the Thameslink,[27] and Crossrail projects in central London; on Crossrail, Costain's contracts included the Paddington [28] and Bond Street stations (both with Skanska),[29] and the north east network upgrade.[30] In 2010, Costain was named Contractor of the Decade by New Civil Engineer.[31]

While led by Andrew Wyllie, the company's CEO from September 2005 to May 2019,[32] Costain invested in technology and consultancy staff, which in March 2018 comprised a third (1,300) of the company's then 4,000 employees.[33][34] Alex Vaughan succeeded Wyllie as CEO.[1][35]

During June 2019, a gloomy trading update following several delayed and cancelled projects contributed to Costain's share value declining over 35%.[35] In December 2019, a court ruling increasing Costain's liabilities on a Welsh road project caused the firm to cut its full year profit forecasts; its share price fell 19% in early trading.[36]

On 11 March 2020, Costain announced a £100m rights issue, aiming to strengthen its balance sheet after it suffered a £6.6m pre tax loss on revenues of £1.16 billion in 2019;[37] the news sent Costain shares down 34%, with the plunge continuing the following day, dropping below £1 to 88p.[38] The company was also affected by the COVID-19 pandemic shutdown with major projects (amounting to a third of operating revenue) suspended. As a result, the board and senior leadership team agreed a 30% reduction in salaries and fees for up to three months, while also making other short term economies.[39] Two months later, Dubai-based contractor ASGC Construction stated that it planned to invest £25m in Costain's £100m rights issue, giving it a 15% stake in the group.[40] The rights issue was concluded in late May 2020, with ASGC becoming Costain's biggest shareholder.[41] In September 2024, ASGC sold its shareholding in Costain to institutional investors for £38m.[42]

In March 2023, Costain announced - after three consecutive years of pre-tax losses - that its results for 2022 showed a pre-tax profit of £34.2m on revenue up 25% at £1,421m (2021: £1,135m).[43]

Structure

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Costain's activities are organised into two operating divisions: Natural Resources (water, nuclear process and oil & gas) and Infrastructure (highways, rail and power).[44]

Major projects

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The Tsing Ma Bridge built by a joint venture involving Costain

Costain is also involved in HS2 lots S1 and S2, working as part of joint venture, due to complete in 2031.[74]

Controversies

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Blacklisting

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Costain was revealed as a subscriber to the United Kingdom's Consulting Association, exposed in 2009 for operating an illegal construction industry blacklist.[75][76] Subsequently, it was also one of the eight businesses that were involved in the launch in 2013 of the Construction Workers Compensation Scheme,[77] a move that was condemned as a "PR stunt" by the GMB union, and described by the Scottish Affairs Select Committee as "an act of bad faith".[78][79]

In December 2017, trade union Unite announced it had issued High Court proceedings against twelve major contractors, including Costain.[80]

Late payment

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In April 2019, Costain was suspended from the UK Government's Prompt Payment Code, for failing to pay suppliers on time.[81] It was reinstated in July 2019.[82]

References

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Citations

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  1. ^ a b Lester, Ahren (7 May 2019). "Costain Confirms Trading In Line As New Chief Vaughan Takes Helm". MorningStar. Archived from the original on 7 May 2019. Retrieved 7 May 2019.
  2. ^ a b c "Annual Results 2023" (PDF). Costain. Retrieved 12 March 2024.
  3. ^ a b c d e f g h Wellings, Fred (2006). Dictionary of British Housebuilders. Troubador. ISBN 978-0-9552965-0-5.
  4. ^ a b Kipping, Norman (2004). "Costain, Sir Richard Rylandes (1902–1966)". In Matthew, H. C. G.; Harrison, Brian (eds.). Oxford Dictionary of National Biography (online ed.). Oxford University Press. doi:10.1093/ref:odnb/32580. Retrieved 7 March 2007. (Subscription or UK public library membership required.)
  5. ^ a b Costain, Albert Reflections 1987
  6. ^ Company Prospectus 1933
  7. ^ Bowley, Marian (1966). The British Building Industry. University Press. ISBN 0835736083.
  8. ^ Jameson, Angela (25 June 2005). "Costain makes return to Iran". The Times.
  9. ^ Times Wednesday September 27 1939, page 4
  10. ^ Hartcup (2011), p. 94.
  11. ^ Potts, Keith (9 September 2009). Dainty, A. (ed.). "Construction during World War II: Management and financial administration" (PDF). Association of Researchers in Construction Management: 847–856.
  12. ^ Times Friday November 20 1964, page 14
  13. ^ Times obituary Monday March 28 1966, page 12
  14. ^ "Firm Eliminates Contract Clause to Uphold Arab Boycott of Israel". Jewish Telegraph Agency. 29 October 1971. Retrieved 22 October 2024.
  15. ^ "How the Channel Tunnel was Built". Folkestone, England / Coquelles Cedex France: Eurotunnel Group. Retrieved 9 December 2016. It was at the time the most expensive construction project ever proposed and the final cost was £9 billion.
  16. ^ "Channel Tunnel (Calais/Folkestone, 1994)". Structurae.
  17. ^ "Company Is to Pay Big Fine for Mine Deaths". Associated Press. 21 February 1993. Retrieved 29 November 2018.
  18. ^ "Costain Homes Division faces fresh cut-backs after pretax profits fall 37.9% to £20.1M in half year to June 30". constructionnews.co.uk. 20 September 1990.
  19. ^ "Bottom Line: Costain losses leave rivals standing". The Independent. 1 April 1993.
  20. ^ a b "End nigh for bleeding Costain". The Independent. 29 April 1995. Retrieved 16 January 2015.
  21. ^ "UK: Coal-mining helps Costain through downturn in Britain". constructionnews.co.uk. 26 July 1990.
  22. ^ "Troubled Carillion calls in Costain saviour". theconstructionindex.co.uk. 2 November 2017.
  23. ^ Tooher, Patrick (12 December 1996). "Costain chief set to collect pounds 360,000 payoff". The Independent.
  24. ^ Boyle, Catherine (28 August 2008). "Tread carefully, but Costain is out to build a better future". The Times.
  25. ^ "Brewer Gold Mine" (PDF). United States Environmental Protection Agency. Retrieved 29 July 2022.
  26. ^ "Costain: Moving into REAL rail". Rail Engineer. 29 April 2014.
  27. ^ Carr, Colin (25 February 2015). "Thameslink". Rail Engineer. Archived from the original on 24 January 2019. Retrieved 24 January 2019.
  28. ^ "Costain/Skanska save £100M from Paddington Crossrail contract". New Civil Engineer. 26 July 2011. Retrieved 24 January 2019.
  29. ^ Fitzpatrick, Tom (1 February 2013). "Costain Skanska JV wins £200m Crossrail Bond Street station". Construction News. Retrieved 24 January 2019.
  30. ^ Carr, Colin (30 June 2016). "Crossrail - The deadline is looming". Rail Engineer. Archived from the original on 24 January 2019. Retrieved 24 January 2019.
  31. ^ "Our History". Costain.com. Retrieved 24 January 2019.
  32. ^ Prior, Grant (6 March 2019). "Andrew Wyllie to retire from Costain after 14 years at helm". Construction Enquirer. Retrieved 6 March 2019.
  33. ^ "Costain thinks smart to stay ahead". Construction Index. 1 March 2018. Retrieved 24 January 2019.
  34. ^ Prior, Grant (22 August 2018). "Tech savvy workforce key to Costain's future". Construction Enquirer. Retrieved 24 January 2019.
  35. ^ a b Jolly, Jasper (28 June 2019). "Costain shares plummet after HS2 and M6 contract delays". Guardian. Retrieved 1 July 2019.
  36. ^ Prior, Grant (12 December 2019). "Costain profits slashed after road row ruling". Construction Enquirer. Retrieved 12 December 2019.
  37. ^ Morby, Aaron (11 March 2020). "Costain plans £100m rights issue after £6.6m loss". Construction Enquirer. Retrieved 11 March 2020.
  38. ^ Champ, Hamish (12 March 2020). "Costain's shares slump below £1". Building. Retrieved 12 March 2020.
  39. ^ "Costain hit by London shutdown". The Construction Index. 31 March 2020. Retrieved 31 March 2020.
  40. ^ Morby, Aaron (7 May 2020). "Dubai contractor to take 15% stake in Costain". Construction Enquirer. Retrieved 7 May 2020.
  41. ^ Rogers, Dave (28 May 2020). "Costain completes £100m cash raising move". Building. Retrieved 28 May 2020.
  42. ^ "Dubai contractor exits Costain". The Construction Index. 11 September 2024. Retrieved 11 September 2024.
  43. ^ "Costain returns to profit". The Construction Index. 14 March 2023. Retrieved 14 March 2023.
  44. ^ "What we do". Costain. Retrieved 23 August 2017.
  45. ^ "Costain history" (PDF). Archived from the original (PDF) on 4 July 2011.
  46. ^ Times Monday August 8 1955, page 5
  47. ^ Times Saturday September 10 1955, page 4
  48. ^ Hobhouse, Hermione, ed. (1986). Survey of London: Kensington Square To Earl's Court. Vol. 42. London County Council. ISBN 0485482428.
  49. ^ Times Tuesday September 3 1957, page 6
  50. ^ Times Monday July 7 1958, page 5
  51. ^ Times Thursday August 21 1958, page 7
  52. ^ Times Wednesday September 23 1959, page 17
  53. ^ "Costain: Did you know? - item 27" (PDF). Archived from the original (PDF) on 4 July 2011.
  54. ^ "Deep Water at Bridgetown - Film by Richard Costain Ltd". British Film Institute. 1961. Archived from the original on 23 October 2012.
  55. ^ Times Monday January 2 1961, page 15
  56. ^ Times Thursday February 16 1961, page 23
  57. ^ Times Monday April 24 1961, page 20
  58. ^ "Courts of Justice". Old Plymouth. Retrieved 17 March 2023.
  59. ^ Times Friday February 7 1964, page 20
  60. ^ Times Tuesday March 2 1965, page 18
  61. ^ Times Monday December 6 1965, page 18
  62. ^ Times Friday October 15 1965, page 20
  63. ^ Times Wednesday April 8 1970, page 26
  64. ^ "Enfield Council uses a major interior operation to move into letting office space". Architects' Data File. 10 May 2016. Retrieved 25 April 2020.
  65. ^ Times Tuesday October 12 1976, page 20
  66. ^ Times Friday June 27 1980, page 21
  67. ^ "Environment Agency". Archived from the original on 17 September 2008.
  68. ^ "Channel Tunnel". Structurae. Retrieved 22 March 2015.
  69. ^ Vorderbrueggen, Lisa (9 August 2013). "Costs of 14 of the most expensive suspension bridges across world". Mercury News. Retrieved 17 April 2019.
  70. ^ OnlineWales Internet Ltd. "Cardiff Bay Barrage Report". newswales.co.uk. Archived from the original on 4 September 2012. Retrieved 22 March 2015.
  71. ^ "Building work starts on London hospital". IFM.net. 13 July 2000. Retrieved 22 April 2018.
  72. ^ "New Western Ticket Hall opens". Archived from the original on 11 January 2009.
  73. ^ "TfL awards £300M Bond Street contract to Costain/Laing O'Rourke JV". New Civil Engineer. 4 August 2010. Retrieved 28 March 2015.
  74. ^ "HS2 contracts worth £6.6bn awarded by UK government". The Guardian. 17 July 2017. Retrieved 13 October 2017.
  75. ^ Evans, Rob (4 August 2009). "Balfour Beatty among firms that bought information on workers". Guardian. UK. Archived from the original on 14 July 2015. Retrieved 17 April 2011.
  76. ^ "Firm sold workers secret data". BBC News. 6 March 2009. Archived from the original on 10 March 2009. Retrieved 17 April 2011.
  77. ^ "Construction blacklist compensation scheme opens". BBC News: Business. BBC. 4 July 2014. Retrieved 7 September 2015.
  78. ^ "Scottish Affairs - Seventh Report Blacklisting in Employment: Final Report". Parliament Scottish Affairs Select Committee. Retrieved 7 September 2015.
  79. ^ McGuffin, Paddy (July 2014). "Blacklisting construction firms try to buy off victimised workers ahead of High Court hearing". morningstaronline.co.uk.
  80. ^ Prior, Grant (4 December 2017). "Unite launches new round of blacklisting legal action". Construction Enquirer. Archived from the original on 12 May 2020. Retrieved 4 December 2017.
  81. ^ Morby, Aaron (29 April 2019). "Industry giants shamed over late payment". Construction Enquirer. Retrieved 29 April 2019.
  82. ^ Prior, Grant (26 July 2019). "Costain reinstated to Prompt Payment Code". Construction Enquirer. Retrieved 29 July 2019.

Sources

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  • Hartcup, Guy (2011). Code Name Mulberry: The Planning Building and Operation of the Normandy Harbours. Barnsley: Pen & Sword Military. ISBN 978-1848845589.
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