Costain Group

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Costain Group plc
TypePublic limited company
LSECOST
IndustryConstruction, civil engineering
Founded1865
HeadquartersMaidenhead, England, UK
Key people
Paul Golby, Chairman
Alex Vaughan, CEO[1]
Revenue£1,155.6 million (2019)[2]
£(21.1) million (2019)[2]
£(2.9) million (2019)[2]
Number of employees
3,400 (2019)[2]
Websitewww.costain.com

Costain Group plc is a British technology based construction and engineering company headquartered in Maidenhead, England. Founded in 1865, its history includes extensive housebuilding and mining activities, but it later focused on civil engineering and commercial construction projects. It was part of the British/French consortium which constructed the Channel Tunnel at the end of the 1980s, and has been involved in Private Finance Initiative projects.

History[edit]

19th century[edit]

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. The partnership lasted until 1888, when Richard Kneen left and Richard Costain's three sons (Richard, William and John) joined him.[3] By the time of the First World War Costain had expanded through Lancashire and into South Wales, where it built houses for munitions workers.[4]

20th century[edit]

After 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]

In 1933, the London based Richard Costain 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 and worked first on the Trans-Iranian Railway and then at Abadan, Iran for BP. 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]

The Second World War saw Costain carrying out extensive military work including airfields and ordnance factories, and it was one of the contractors who built the Mulberry harbour units.[8] Some small estate development was undertaken, but it was not until the acquisition of Nottingham's Rostance Group in 1962 that private housebuilding resumed on any scale.[3]

Helped also by the acquisition of the Blackpool firm of R Fielding in 1969, Costain was building around 1,000 houses a 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 in 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 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, problems 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.[9]

In the meantime, in 1985, Costain was part of the TransManche Link consortium that constructed the Channel Tunnel.[10]

Substantial losses were incurred in the beginning of the 1990s, and asset sales followed, leaving Costain as a predominantly construction oriented business.[3] At a dramatic low point in April 1995, the demise of Costain was predicted, incorrectly, by broadsheets in the United Kingdom. It was not expected to survive as an operating company by the end of the century.[11] In 1999, Brewer Gold Mine, a U.S. subsidiary of Costain, abandoned a gold mine in South Carolina, which had been closed, and ceased performing its remediation duties.[12]

21st century[edit]

In the early years of the 21st century, Costain worked on the Channel Tunnel Rail Link, including the modernisation of London St Pancras station to accept Eurostar trains,[13] and on the Thameslink,[14] and Crossrail projects in central London; on Crossrail, Costain's contracts included the Paddington [15] and Bond Street stations (both with Skanska),[16] and the north east network upgrade.[17] In 2010, Costain was named Contractor of the Decade by New Civil Engineer.[18]

Under Andrew Wyllie, CEO from September 2005 to May 2019,[19] Costain invested in technology and consultancy staff, which in March 2018 comprised a third (1,300) of the company's then 4,000 employees.[20][21] Alex Vaughan succeeded Wyllie as CEO.[1][22]

In June 2019, a gloomy trading update following delayed and cancelled projects, led to Costain shares slumping over 35%.[22] In December 2019, a court ruling increasing Costain's liabilities on a Welsh road project led the firm to cut its full year profit forecasts; its share price fell 19% in early trading.[23]

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;[24] the news sent Costain shares down 34%, with the plunge continuing the following day, dropping below £1 to 88p.[25] 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.[26] In early May, Dubai-based contractor ASGC said it planned to invest £25m in Costain's £100m rights issue, giving it a 15% stake in the group.[27] The rights issue was concluded in late May 2020, with ASGC becoming Costain's biggest shareholder.[28]

Structure[edit]

Costain's activities are organised into two operating divisions: Natural Resources (water, nuclear process and oil & gas) and Infrastructure (highways, rail and power).[29]

Major projects[edit]

The Tsing Ma Bridge built by a joint venture involving Costain

Projects undertaken by or involving the Company have included:

Costain is also involved in the redevelopment of Bond Street Station due for completion in 2021[41] and HS2 lots S1 and S2, working as part of joint venture, due to complete in 2031.[42]

Controversies[edit]

Blacklisting[edit]

Costain was revealed as a subscriber to the United Kingdom's Consulting Association, exposed in 2009 for operating an illegal construction industry blacklist. It was also later one of the eight businesses involved in the launch in 2013 of the Construction Workers Compensation Scheme,[43] condemned as a "PR stunt" by the GMB union, and described by the Scottish Affairs Select Committee as "an act of bad faith".[44]

In December 2017, trade union Unite announced it had issued High Court proceedings against twelve major contractors, including Costain.[45]

Late payment[edit]

In April 2019, Costain was suspended from the UK Government's Prompt Payment Code, for failing to pay suppliers on time.[46] It was reinstated in July 2019.[47]

References[edit]

  1. ^ a b Lester, Ahren (7 May 2019). "Costain Confirms Trading In Line As New Chief Vaughan Takes Helm". MorningStar. Retrieved 7 May 2019.
  2. ^ a b c d "Annual Results 2019" (PDF). Costain. Retrieved 11 March 2020.
  3. ^ a b c d e f g Wellings, Fred. Dictionary of British Housebuilders (2006) Troubador. ISBN 978-0-9552965-0-5
  4. ^ a b Norman Kipping, “Costain, Sir Richard Rylandes (1902–1966),” rev., in Oxford Dictionary of National Biography, ed. H. C. G. Matthew and Brian Harrison (Oxford: OUP, 2004), (accessed March 7, 2007).
  5. ^ a b Costain, Albert Reflections 1987
  6. ^ Company Prospectus 1933
  7. ^ Bowley, Marion The British Building Industry, 1966
  8. ^ Hartcup, p. 94
  9. ^ "Company Is to Pay Big Fine for Mine Deaths". Associated Press. 21 February 1993. Retrieved 29 November 2018.
  10. ^ "Channel Tunnel (Calais/Folkestone, 1994)". Structurae.
  11. ^ "End nigh for bleeding Costain". The Independent. 29 April 1995. Retrieved 16 January 2015.
  12. ^ "Brewer Gold Mine" (PDF). United States Environmental Protection Agency. Retrieved 5 August 2020.
  13. ^ "Costain: Moving into REAL rail". Rail Engineer. 29 April 2014.
  14. ^ Carr, Colin (25 February 2015). "Thameslink". Rail Engineer. Retrieved 24 January 2019.
  15. ^ "Costain/Skanska save £100M from Paddington Crossrail contract". New Civil Engineer. 26 July 2011. Retrieved 24 January 2019.
  16. ^ Fitzpatrick, Tom (1 February 2013). "Costain Skanska JV wins £200m Crossrail Bond Street station". Construction News. Retrieved 24 January 2019.
  17. ^ Carr, Colin (30 June 2016). "Crossrail - The deadline is looming". Rail Engineer. Retrieved 24 January 2019.
  18. ^ "Our History". Costain.com. Retrieved 24 January 2019.
  19. ^ Prior, Grant (6 March 2019). "Andrew Wyllie to retire from Costain after 14 years at helm". Construction Enquirer. Retrieved 6 March 2019.
  20. ^ "Costain thinks smart to stay ahead". Construction Index. 1 March 2018. Retrieved 24 January 2019.
  21. ^ Prior, Grant (22 August 2018). "Tech savvy workforce key to Costain's future". Construction Enquirer. Retrieved 24 January 2019.
  22. ^ a b Jolly, Jasper (28 June 2019). "Costain shares plummet after HS2 and M6 contract delays". Guardian. Retrieved 1 July 2019.
  23. ^ Prior, Grant (12 December 2019). "Costain profits slashed after road row ruling". Construction Enquirer. Retrieved 12 December 2019.
  24. ^ Morby, Aaron (11 March 2020). "Costain plans £100m rights issue after £6.6m loss". Construction Enquirer. Retrieved 11 March 2020.
  25. ^ Champ, Hamish (12 March 2020). "Costain's shares slump below £1". Building. Retrieved 12 March 2020.
  26. ^ "Costain hit by London shutdown". The Construction Index. 31 March 2020. Retrieved 31 March 2020.
  27. ^ Morby, Aaron (7 May 2020). "Dubai contractor to take 15% stake in Costain". Construction Enquirer. Retrieved 7 May 2020.
  28. ^ Rogers, Dave (28 May 2020). "Costain completes £100m cash raising move". Building. Retrieved 28 May 2020.
  29. ^ "What we do". Costain. Retrieved 23 August 2017.
  30. ^ Costain history Archived July 4, 2011, at the Wayback Machine
  31. ^ Hobhouse, Hermione, ed. (1986). Survey of London: Kensington Square To Earl's Court. 42. London County Council. ISBN 0485482428.
  32. ^ Costain: Did you know? - item 27 Archived July 4, 2011, at the Wayback Machine
  33. ^ Deep Water at Bridgetown - Film by Richard Costain Ltd British Film Institute, 1961
  34. ^ "Enfield Council uses a major interior operation to move into letting office space". Architects' Data File. 10 May 2016. Retrieved 25 April 2020.
  35. ^ "Environment Agency". Archived from the original on 17 September 2008.
  36. ^ "Channel Tunnel". Structurae. Retrieved 22 March 2015.
  37. ^ Vorderbrueggen, Lisa (9 August 2013). "Costs of 14 of the most expensive suspension bridges across world". Mercury News. Retrieved 17 April 2019.
  38. ^ OnlineWales Internet Ltd. "Cardiff Bay Barrage Report". newswales.co.uk. Archived from the original on 4 September 2012. Retrieved 22 March 2015.
  39. ^ "Building work starts on London hospital". IFM.net. 13 July 2000. Retrieved 22 April 2018.
  40. ^ "New Western Ticket Hall opens". Archived from the original on 11 January 2009.
  41. ^ "TfL awards £300M Bond Street contract to Costain/Laing O'Rourke JV". New Civil Engineer. 4 August 2010. Retrieved 28 March 2015.
  42. ^ "HS2 contracts worth £6.6bn awarded by UK government". the Guardian. 17 July 2017. Retrieved 13 October 2017.
  43. ^ "Construction blacklist compensation scheme opens". BBC News: Business. BBC. 4 July 2014. Retrieved 7 September 2015.
  44. ^ "Scottish Affairs - Seventh Report Blacklisting in Employment: Final Report". www.parliament.uk. Scottish Affairs Select Committee. Retrieved 7 September 2015.
  45. ^ Prior, Grant (4 December 2017). "Unite launches new round of blacklisting legal action". Construction Enquirer. Retrieved 4 December 2017.
  46. ^ Morby, Aaron (29 April 2019). "Industry giants shamed over late payment". Construction Enquirer. Retrieved 29 April 2019.
  47. ^ Prior, Grant (26 July 2019). "Costain reinstated to Prompt Payment Code". Construction Enquirer. Retrieved 29 July 2019.

Sources[edit]

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

External links[edit]