Costain Group (COST) Trading update summary

Executive summary

• New agreement reached for the defined benefit pension scheme, removing the dividend parity arrangement and eliminating future cash contributions until January 2031.

• Intention to nearly double dividend payments in FY 26 and initiate a £20m share buyback, reflecting strong financial position.

• FY 25 trading positive, with profitability and cash generation exceeding expectations.

Financial highlights

• FY 25 adjusted operating profit expected in line with market expectations (£46.4m).

• Adjusted operating margin to exceed 4.5% run-rate target in FY 25.

• Closing net cash of £190m, ahead of market expectations (£171m), due to working capital timing.

• H2 25 revenue similar to H1 25 (£525m), reflecting project rephasing and completions.

Outlook and guidance

• Board intends to implement a 3.0x dividend cover policy, nearly doubling dividend cash payments in FY 26.

• £20m share buyback planned for FY 26, with potential for further capital returns based on ongoing capital structure reviews.

• Confidence in further progress for FY 26 and a step change in performance in FY 27 and beyond.