Construction work has been suspended on all of Costain’s big projects in London, as senior leadership agrees to take a 30% pay cut to protect cash
In response to the coronavirus crisis, Crossrail, HS2 enabling works and Thames Tideway have been put on hold by Costain.
These projects account for nearly a third of the group’s revenue.
The company said “all employees who can work from home are now doing so” and for those who are recognised as essential workers providing critical work on construction sites, they have put in place strict measures to ensure their health and safety.
Costain provides a range of services to strategic highway, local authority clients and to water utilities, it has seen activities continue at safe levels of operation. These services represent 50% of its annual revenues.
In its consultancy services the energy, defence and aviation, which together represent 10% of the annual revenues, Costain reveals it is seeing little change in demand.
However, in London to ensure safe travel while social distancing, on-site construction activities including on its Crossrail, HS2 Enabling Works and Thames Tideway contracts have been paused, pending further review, at the request of its clients.
On-site construction activities which have been paused represent 30% of its revenues. Home-based activities which are continuing on these projects represent 10%.
In the statement, Costain said: “We remain well placed to benefit from the long-term opportunity to address the UK’s changing infrastructure needs once our operations can fully resume.”
To mitigate the financial impact of COVID-19 and protect its cash position during this period of disruption, Costain is implementing a number of actions:
- Making reductions to its cost base and deferring capital expenditure.
- Taking advantage of the opportunity to defer PAYE and VAT payments.
- The board and senior leadership team have agreed a 30% reduction in salaries and directors’ fees for up to three months
To safeguard jobs across the group, Costain will make use of the government’s job retention scheme, and will ‘furlough’ the affected workforce, ensuring immediate remobilisation when conditions improve.
Alex Vaughan, chief executive officer of Costain, said: “I would like to thank everyone who is supporting our business through this challenging period and in particular all our workforce who continue to work so professionally, as they always do, in supporting each other and meeting our clients’ critical needs.
“We are continually monitoring and implementing the necessary measures to safeguard those who continue to work on essential projects 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.
“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.”