Annual Report and Accounts 2024
Creating a
sustainable future
Costain Group PLC Annual Report and Accounts 2024
Costain Group PLC | Annual Report and Accounts 2024
Overview
Highlights 1
OurPurpose 2
Chair’sStatement 4
Strategic Report
ChiefExecutiveOfficer’sStatement 8
OurVisionandStrategy 12
MarketOverview 13
OurBusinessModel 16
PurposeinAction 18
OperationalReview 24
KeyPerformanceIndicators 30
OurStakeholders 32
OurSustainabilityPerformance 34
TheTaskForceonClimate-related
FinancialDisclosures(TCFD) 36
DevelopingOurClimateTransitionPlan 41
GenderandEthnicityPayGap 44
ChiefFinancialOfficer’sReview 46
RiskManagement 50
ViabilityStatement 56
Non-financialandsustainability
informationstatement 57
Governance
BoardofDirectors 58
ExecutiveBoard 60
GovernanceataGlance 62
Chair’sIntroduction 65
OurGovernanceStructure 68
AttendanceandComposition 70
BoardPerformance 71
OtherBoardMatters 72
S172Statement 74
BoardDiversity 78
Purpose,ValuesandCulture 80
WorkforceEngagement 82
AuditandRiskCommitteeReport 86
NominationCommitteeReport 91
Directors’RemunerationReport 94
RemunerationataGlance 95
AnnualStatementbyChairof
theRemunerationCommittee 97
Directors’RemunerationPolicy 100
AnnualReportonRemuneration 104
Directors’Report 121
Directors’ResponsibilityStatement 127
IndependentAuditor’sReport 128
Financial Statements
ConsolidatedIncomeStatement 137
ConsolidatedStatement
ofComprehensiveIncome 138
ConsolidatedStatement
ofFinancialPosition 139
CompanyStatement
ofFinancialPosition 140
ConsolidatedStatement
ofChangesinEquity 141
CompanyStatement
ofChangesinEquity 142
ConsolidatedCashFlowStatement 143
NotestotheFinancialStatements 144
Five-YearFinancialSummary 188
Other Information
FinancialCalendarandOther
ShareholderInformation 189
For the latest investor relations information visit our website /
www.costain.com/investors
Together we shape,
create and deliver
solutions that transform
the performance of
the infrastructure
ecosystem.
2024 0.11 LTIR
2024 £410k
2024 278,218tCO
2
e
2023 0.12 LTIR
2023 £460k
2023 281,355tCO
2
e
2022 0.09 LTIR
2022 £391k
2022 320,722tCO
2
e
2024 £31.1m
2024 11.3p
2024 £43.1m
2024 14.6p
2023 £26.8m
2022 £34.9m
2023 8.1p
2023 £40.1m
2023 12.2p
2022 9.4p
2022 £36.3m
2022 9.9p
2024 £1,251.1m
2024 2.5%
2024 £27.1m
2024 3.4%
2023 £1,332.0m
2022 £1,421.4m
2023 2.0%
2023 £72.0m
2023 3.0%
2022 2.5%
2022 £72.9m
2022 2.6%
Safety
3
0.11 LTIR
Revenue
£1,251.1m
Operating profit
£31.1m
Carbon emissions (scope 1,2 and 3)
278,218tCO
2
e
Social contribution
4
£410k
Operating profit margin
2.5%
Basic earnings per share
11.3p
Adjusted free cash flow
1
£27.1m
Adjusted operating profit
2
£43.1m
Adjusted operating
profit margin
2
3.4%
Adjusted basic
earnings per share
2
14.6p
Financialhighlights Non-financialhighlights
1 Adjusted free cash flow is defined as cash from operations, excluding cash flows relating to adjusting
items and pension deficit contributions, less taxation and capital expenditure.
2 See notes 2 to 4 of the financial statements for adjusted metric details and definitions, and reconciliation
to reported metrics.
3 Lost time injury rate is calculated by dividing the number of lost time Injuries by the number of hours
worked, multiplied by 100,000.
4 Social contribution is defined as the sum of charitable/community donations, employee fundraising,
and the social value resulting from employee volunteering.
See our KPIs for more information on the above /
pages 30 and 31
See our Sustainability Performance for more
information / page 34
Our sustainability
performance
Operating responsibly is integral
to our strategic priorities of
people, planet and performance,
underpinning how we operate
and our expectations of our
people, suppliers and partners.
For further information, download
our Sustainability performance
and Sustainability report here /
www.costain.com/our-culture/
performance-and-reports/
01Strategic ReportOverview Governance Financial Statements
OurPurpose
Improving
people’s lives
How we do that
We shape, create and deliver pioneering solutions that
transform the performance of the infrastructure ecosystem.
Where we operate
Our focus is on four essential markets in the UK: Transport, Water, Energy
and Defence and everything we do is rooted in delivering pioneering
solutions and is organised around our customers.
Transportation
Within the Transportation division, we support key customers such as government transport agencies,
as well as local and devolved authorities and private regulated bodies. We report results in three sectors:
Road Rail Integrated Transport
Water Energy Defence and
Nuclear Energy
Natural Resources
Within the Natural Resources division we work with privately-owned utility, water and sewerage companies,
with energy companies, and in defence, with several public and private sector organisations.
We report results in three sectors:
See our Operational Review /
pages 24 to 29
02 Costain Group PLC | Annual Report and Accounts 2024
To create connected,
sustainable infrastructure
enabling people and the
planet to thrive.
Our vision
Our targets
Increasing revenue and
operating profit, delivering
a run-rate of 4.5% adjusted
operating profit
1
during
2025, and in excess of
5.0% thereafter.
1 See notes 2 to 4 of the financial statements
for adjusted metric details and definitions,
and reconciliation to reported metrics.
See our Vision and Strategy /
page 12
Our
stakeholders
We collaborate more closely
than ever with customers,
partners, communities,
government, wider industry
and shareholders to meet
today’s infrastructure
demands.
See Our Stakeholders /
pages 32 and 33
How we
measure
success
Our KPIs are aligned
with how we measure
our performance against
our strategic priorities.
These reflect our vision
of creating infrastructure
that helps people and the
planet to thrive, while also
ensuring that we deliver
for all our stakeholders.
See our KPIs /
pages 30 and 31
See our Risk Management and Principal risks /
pages 50 to 55
03Strategic ReportOverview Governance Financial Statements
Chair’sStatement
Another strong operational
performance, delivering on
our strategy and increasing
shareholder value.
“ We continue to deliver well, growing
our adjusted operating profit, and
importantly, exceeding our 2024 margin
target. Our forward work position of
£5.4bn was a record increase as we
build a long-term pipeline of future
opportunities for the Group, and
together with our customers we are
creating the prosperity, resilience
and decarbonisation of the UK.”
Kate Rock
Chair
2024 £27.1m
2023 £72.0m
2022 £72.9m
Adjusted free cash flow
2
£27.1m
2024 £43.1m
2023 £40.1m
2022 £36.3m
Adjusted operating profit
1
£43.1m
1 See notes 2 to 4 of the financial statements for adjusted metric details and definitions, and reconciliation
to reported metrics.
2 Adjusted free cash flow is defined as cash from operations, excluding cash flows relating to adjusting
items and pension deficit contributions, less taxation and capital expenditure.
Costain Group PLC | Annual Report and Accounts 202404
Costain delivered another strong set of financial results in 2024 with
adjusted operating profit
1
increasing for the fourth year in a row.
Our adjusted operating margin
1
of 4.4% in the second half exceeded
our 2024 target of a 3.5% run-rate during the year.
Our financial performance delivered another strong set of results,
as we continue to progress well against our strategy, clearly
demonstrating the strength of our multi-sector strategic focus and
the robustness of Costain’s operational and financial management.
Significantly, our adjusted operating margin
1
of 4.4% in H2 24
exceeded the 3.5% target margin run-rate to be achieved during
the course of 2024, and we remain on track to deliver a 4.5%
margin run-rate during 2025. At the same time, we have been
successful in growing our forward work position, increasing by a
record £1.5bn in 2023 to £5.4bn. Alex Vaughan, CEO, discusses
our ongoing operational improvement and the increasing strength
of our long-term prospects in the Chief Executive Officer’s
Statement on pages 8 to 11. Helen Willis, CFO, expands on our
financial performance in the Chief Financial Officer’s Review on
pages 46 to 49.
Our customers
There remains a greater requirement than ever to update, connect
and integrate infrastructure ecosystems to meet the needs of the
UK’s growing population, address the impact of climate change
and support increased economic and environmental resilience.
These are key targets in the new Government’s mission to create
a prosperous, resilient and decarbonised UK.
Our strategy remains unchanged: Costain’s commitment to
creating connected, resilient and sustainable infrastructure is
core to all our activities, with our focus remaining on the four key
markets of Transport, Water, Energy and Defence. We focus on
long-term, strategic relationships with Tier 1 customers who are
meeting critical national needs. We aim to be the partner of choice
for all our customers as they meet their business challenges,
bringing together a unique mix of engineering and consulting
solutions for increasingly complex problems. We discuss our
strategy in more detail on pages 9 to 11.
Costain’s strategic focus delivered a forward work position of
£5.4bn at the end of 2024, a record increase on the £3.9bn we
saw at the end of 2023, which was driven mainly by growth in
Water and Rail. As I noted last year, we forecast that the Water
sector’s AMP8 (Asset Management Plan) programme would be
at least twice the size of AMP7, as the UK looks to upgrade and
increase the resilience of its water infrastructure. In Energy, we
are increasingly active in carbon-reduction technologies such as
the hydrogen project in Teesside.
We also were pleased to see the commitment to completing the
tunnelling to Euston for HS2 announced in the October 2024
Budget, and in December, firstly as a sole bidder, and then also
via a joint venture, Costain was awarded two further major
HS2 systems contracts.
Looking more broadly, there remains a continued commitment
to improving the UK’s infrastructure. We expect further details
for UK infrastructure spending to be set out in the Government’s
2025 Spring Review.
Delivering sustainability
Delivering sustainable solutions to our customers and applying
these same principles to our internal operations is of crucial
importance and runs through everything we do as a Group.
In 2024 we completed our second annual double materiality
assessment, re-confirming the materially important ESG issues for
Costain as set out in our 2023 ESG programme. One of the most
materially important ESG issues for Costain is our transition to
net zero.
We have been working hard to develop a robust and ambitious
carbon transition plan (see pages 41 to 43) to give Costain a
competitive advantage and minimise transition risks. The Board
approved a net zero target for the Group of 2045, following a
review of the critical dependencies and detailed scenario analysis
for meeting net zero emissions. We are confident that this revised
target is ambitious, and where possible we will deliver earlier;
for example, with Scope 1 and 2 which we are optimistic can be
achieved by 2035. We also will be resubmitting our targets to the
Science Based Targets Initiative (SBTi) in due course.
In August 2024, we were proud to be awarded the Green
Economy Mark by the London Stock Exchange, recognising that
more than 50% of our revenue in 2023 came from products and
services that contribute to the global green economy. Costain
is one of only around 100 corporations and funds that hold the
Green Economy Mark, which represents around 6% of all entities
listed on the exchange.
Applying sustainable procurement principles is optimising the
value we provide for our customers, enhancing the social and
environmental outcomes achieved from our work. In 2024
our contracts (including joint ventures) spent £650m with
SMEs, representing 41% of their total spend, exceeding the UK
Government target of 33%, and exceeding our FY23 performance
of 38%.
05Strategic ReportOverview Governance Financial Statements
Chair’sStatement continued
We continue to prioritise our community relationships, and the
Considerate Constructor Scheme rated Costain contracts on
average 46/50 (FY23: 45/50) exceeding the industry average of
41/50. This third-party industry assessment highlights the high
standards expected of Costain contracts, confirming our position
as an industry leader in responsible business.
Our people
Our outstanding team is at the heart of everything that we do and
essential to the success of our business. Our people strategy is
focused on six key themes:
• Excellent leadership and line management role modelling of our
values and behaviours, to motivate and engage our people.
• Having a diverse, inclusive, and thriving workforce.
• Creating high-performing, agile teams with a one-Costain ethos.
• Developing skills, capabilities, and talent now and for the
future giving our people the opportunity to grow their careers
at Costain.
• Ensuring our people feel valued, respected, recognised
and appropriately rewarded.
• Valuing the health and wellbeing of our people and the safety
of everyone working with us and around us, which is also one
of our core values.
I am pleased to see improvements in areas where we have taken
targeted action and that we have retained our Best Companies
accreditation as a ‘A Very Good Company to Work For’ in our 2024
engagement survey. More details about these initiatives can be
found in our case study on page 83.
In April 2024 we held a dedicated leadership impact day where all
Costain offices and project teams collectively took time to create
a safe space to talk about wellbeing. The day was focused on
the wellbeing tools and resources available to our people and on
discussing areas for improvement to ensure everyone can be at
their best.
Also in April, we increased support for colleagues who are parents
and carers, enhancing our maternity and adoption leave offerings
to 26 weeks at full pay, paternity leave to eight weeks at full pay
and introducing paid carers’ leave. In recognition of the positive
action Costain has taken over recent years on gender equality,
in June we were listed as one of The Times Top 50 Employers for
Gender Equality 2024.
One of our priorities is to develop our people and give them
opportunities to grow their careers at Costain. We have developed
a leadership framework that provides the blueprint for leadership
at Costain and is being embedded into our people processes and
development plans.
We continue to invest in the business and have introduced a
new HR system to improve employee experience, enhance
cybersecurity, and enable greater digital integration. The system
was launched in Q4 24 following testing.
I was extremely impressed by the commitment and quality of our
teams that I met at the sites I visited during 2024. I joined the
teams at HS2 and Southern Water CMDP for Costain’s impact
days. In April, as noted above, we focussed on wellbeing, and
in October our focus was on engagement and communication
on safety, health and environment. I also enjoyed visiting and
speaking to our dedicated and highly capable teams at SMA
NEAR, Cadent and Heathrow, and I joined a Costain Connected
event with the team members working with SCS JV on the HS2
project. The Board’s workforce engagement activities are set out
in more detail on pages 82 to 85.
The Board and I are highly appreciative of our people and would
like to thank them for the work they do.
Board evaluation and performance
During the year, our Board Performance Review was externally
facilitated and we were delighted that the Report concluded that
both the business and the Board were considerably stronger than
at the time of the previous review. The Board discussed the report
and identified areas for further improvement and details can be
found on page 71.
Pension and capital allocation
In June 2023, we reached an agreement with the Trustee of
the Group’s defined benefit pension scheme on the ongoing
contributions to the Scheme. The agreed contributions from the
Group to the Costain Pension Scheme run from 1 July 2023 to
31 March 2027 and is for a payment of £3.3m per year, payable in
monthly instalments, scheduled to increase in line with inflation
(CPI) each 1 April.
An assessment of the Scheme funding position was carried out on
31 March 2024 and, as the funding level (on a Technical Provisions
basis) was more than 101%, contributions were not required from
1 July 2024 to 30 June 2025.
06 Costain Group PLC | Annual Report and Accounts 2024
In addition to contributions not being required, as the funding level
is above 101%, ‘dividend parity’ was also suspended for a year.
Under the dividend parity arrangement, an additional matching
contribution (the excess of the total dividend above the Scheme
contribution) is paid to the Costain Pension Scheme when the
total of the interim and final dividends (or other return of capital
such as a buyback) is greater than the contributions paid into the
Scheme in the previous Scheme financial year, which runs from
1 April to 31 March.
Due to moving into surplus, we had the flexibility to give additional
returns to shareholders and having reviewed the Group’s strong
cash performance and ongoing capital requirements, the Board
concluded in August 2024 that an on-market share buyback
programme of £10m (excluding stamp duty and expenses) was
appropriate and a value-enhancing use of cash. The buyback
programme was completed in November 2024.
Dividend
Given the Group’s improved financial performance, net cash
position and growth prospects, the Board is proposing a final
dividend of 2.0p for the period to 31 December 2024, which
represents 2.4p for the year, having declared an interim dividend
of 0.4p per ordinary share for the six months ended 30 June 2023,
representing a doubling of the full-year 2023 dividend.
Board changes
As we announced on 12 March 2024, Bishoy Azmy stepped down
from the Board with effect from 31 March 2024. We are very
grateful for his considerable contribution and support to Costain
since June 2020.
Looking ahead
The Board would like to thank our people, customers and suppliers
for their efforts and support during the year and their long-term
commitment to the Group.
While we remain mindful of the near term macro-economic and
geopolitical conditions, and their importance to Government
priorities and the timing of spending, we are well positioned for
further cash generation and earnings growth. We are increasingly
confident in the Group’s prospects, as reflected in the Board’s
proposal to double the FY24 dividend.
Kate Rock
Chair
10 March 2025
Supporting communities
and apprentices
The communities we work with are an
integral part of the projects we deliver,
and in 2024 we launched our Social Value
Plan, with a goal of improving a million lives
by 2030. Much of the impact is achieved
through our partnerships with more
than 40 charities, social enterprises and
schools, including the Samaritans.
In line with the strong growth we have
already seen and expect in the future, we
are increasing our early careers intake of
apprentices, graduates and internships
with more than 180 places available.
See our Focus on People /
pages 18 and 19
Further reading
Operational Review / pages 24 to 29
Risk Management / pages 50 to 55
Climate metrics / page 42
07Strategic ReportOverview Governance Financial Statements
ChiefExecutiveOfficer’sStatement
Delivering another
strong performance.
“ Our clear strategy of providing
essential infrastructure to
meet the UK’s critical national
needs, underpinned by strong
operational performance,
is delivering growth in the
performance of the Group.”
Alex Vaughan
Chief Executive Officer
Costain Group PLC | Annual Report and Accounts 202408 Costain Group PLC | Annual Report and Accounts 202408
2024 £43.1m
2023 £40.1m
2022 £36.3m
2024 £1,251.1m
2023 £1,332.0m
2022 £1,421.4m
2024 3.4%
2023 3.0%
2022 2.6%
Another strong performance, with continued growth in adjusted operating
profit
1
and margin, a record increase in our forward work position and
a broadening of customer mix, demonstrating strong momentum in our
chosen markets.
In 2024, we:
Delivered further strong operational and financial performance:
• Revenue of £1,251m (FY23: £1,332m) reflecting the timing
of contract starts and completions, see pages 26 to 29 for
more details.
• An adjusted operating profit
1
of £43.1m, up 7.5% on last year.
1
• An improved adjusted operating margin
1
of 3.4%
1
, an increase
on last year’s 3.0%. The margin in the second half of 2024 was
4.4%, exceeding our margin target of 3.5% run-rate during the
course of 2024.
• A forward work position of £5.4bn, standing at more than four
times 2024 revenue, as we continued to win key strategic
contracts on long-term programmes.
• An adjusted earnings per share
1
growth of 19.7% from
12.2p in 2023 to 14.6p in 2024.
• An industry-leading Lost Time Injury Rate.
Continued to strengthen our business:
• We saw ongoing predictable contract performance, benefitting
from strong risk management in work winning and contract
delivery, which is discussed in more detail below.
• Further broadened our Tier 1 customer mix across our growth
markets, with strong growth in Water and Rail.
• We are positioned well on primary investment programmes
as we continue to diversify our business customers, and have
already secured key contracts in all of our six sectors.
Increased our returns to shareholders:
• In H1 24, our pension scheme moved into actuarial surplus,
allowing the Company to suspend payments to the scheme
for a year. ‘Dividend parity’, discussed in more detail on page 7
was also removed, and this, combined with ongoing improved
operational and financial performance, enabled us to announce
a £10m buyback, which was completed in November 2024.
• We also propose an increase in the final dividend for 2024 from
0.8p to 2.0p, resulting in the dividend for FY24 increasing from
1.2p to 2.4p, a doubling year-on-year.
I’m grateful for the hard work and support of all our employees
and partners during the year, both to deliver this progress and to
navigate the challenging operating environment. Thank you.
Our strategy
The Group is committed to delivering on its purpose to improve
people’s lives, and our vision remains to create connected,
sustainable infrastructure enabling both people and the planet
to thrive.
The medium-term priorities of the business are to be an admired
company, growing in strong markets, with the benefit of a broader
more resilient customer base, with predictable best in class
delivery of its services and building a meaningful consultancy
service line.
Through its focus on meeting critical national needs, the Group
benefits from being strategically positioned in four key markets
in which long-term critical investment continues to be made
(Transport, Water, Energy and Defence) providing us with a
strategic, diversified and resilient customer base.
Together with our customers, supply chain and partners,
we are creating a more prosperous, resilient and decarbonised UK.
The infrastructure we deliver drives economic growth, strengthens
the ability to withstand extreme weather, energy shocks and
threats to our national security, and supports the decarbonisation
of the UK as well as a more biodiverse environment.
We have explicitly chosen to work with Tier 1 customers who wish
to partner with a business such as ours to help them shape, create
and deliver their business plan commitments and investment
programmes, and to navigate the various challenges facing their
businesses. We discuss our strategy and markets in more detail
on pages 12 to 15.
We forecast long-term spending increases in our four chosen
markets and significant long-term opportunities for the Group,
with the water investment already announced expected to result
in a doubling of investment during the upcoming regulatory
period, AMP8.
1 See notes 2 to 4 of the financial statements for adjusted metric details
and definitions, and reconciliation to reported metrics.
Revenue
£1,251.1m
Adjusted operating profit
1
£43.1m
Adjusted operating profit margin
1
3.4%
09Strategic ReportOverview Governance Financial Statements
ChiefExecutiveOfficer’sStatement continued
At the end of 2024, our forward work position, which is the
combined order and preferred bidder books and is comparable
to how other companies report in the sector, was £5.4bn
at the end of FY24. This represents more than four times
FY24 revenue, which is market-leading and bodes well for future
revenue delivery. Our order book, where contracts are signed and
ready to proceed, was £2.5bn (FY23: £2.1bn), and our preferred
bidder book stood at £2.9bn (FY23: £1.8bn), see page 25 for
further details. Looking to this year, we also have £950m of
Group revenue secured for 2025, representing 80% of forecast
revenue for the year.
Our focus
We remain committed to operating with a clear focus on People,
Planet and Performance.
PEOPLE – Ensuring safety, diversity, inclusion, and a positive
social impact for our people and the communities we serve are
key principles for the Group. Please see pages 18 to 19 for some
examples of our work in this area.
We aim to:
• Keep everyone safe.
• Have our best team and expertise.
• Have strong community relationships.
• Create a positive social impact.
Safety is a core value of Costain. We are pleased to report that
we ended 2024 with a strong health and safety performance,
having continued our focus as a learning organisation by driving
improvements through key leading indicators. These include
workforce engagement and targeted assurance activities,
which are contributing to our aim of eliminating harm across all
our activities. We measure our safety performance through our
lost time injury rate (LTIR) which for FY24 was 0.11 (FY23: 0.12).
Our LTIR is defined as a ratio of the total number of lost time
incidents (defined by the Health & Safety Executive) per every
100,000 hours worked.
We continue to work to address our gender and ethnicity pay
gaps and enhance our inclusive culture. In recognition of our
progress, we achieved Disability Confident Level 3 and were
recognised as a Times Top 50 Employer for Gender Equality in
2024. Our Chair discusses our positive result for our engagement
survey on page 67.
During the year, we produced Costain’s first Group-wide social
value plan, setting an objective to improve one million lives by
2030, and building on our purpose. To help us achieve this aim,
we have invested in a new social value tool to support us in
measuring our progress against this objective and enhance the
digital capability we offer our customers.
In recognition of our consistent social value performance and
value creation, our RDP North A1 Birtley to Coal House project
won the ‘Delivering Social Value’ award at the National Highways
Industry Awards. The judges noted that the category had a
record-breaking number of extremely strong entries and that
Costain stood out for the breadth and depth of social value
activities delivered for, and with, the local community.
PLANET – Safeguarding the future of our planet is part of who
we are and a critical requirement for our customers. We leave a
positive legacy on all our projects. Please see pages 20 and 21 for
some examples of our work in this area.
We are passionate about decarbonising our business and the
solutions we develop for our customers. Absolute greenhouse
gas (GHG) emissions (including Scope 3), is one of our key
non-financial performance indicators (see page 31) and
I am pleased to report that we have delivered another year-
on-year emissions reduction (by 1%) and, when normalised by
turnover (tCO
2
e/£m), emissions reduced by 9% compared to our
2021 baseline.
We were pleased to secure verification from BSI against the PAS
2080:2023 standard, which recognised the updates to Costain’s
carbon management system and tools to improve emissions
reductions. We utilise a carbon tracker, which standardises and
improves emissions reporting across our projects, and this is
being rolled out across the business, making it easier for our
supply chain partners to accurately record and share their carbon
emissions with us. It is expected that data shared by suppliers will
be used to inform future project planning and provide vital insights
to enable the reduction of Scope 3 emissions, which continues
to be a key directive of the PAS 2080 standards and a priority
for Costain.
In early 2024, we received confirmation of our near-term and
net zero targets by the Science-Based Target Initiative. Since
then, we have undertaken a detailed review of our transition
pathway, and we will be re-submitting more ambitious targets
for verification in alignment with Costain’s carbon transition
plan (see pages 41 to 43). For further information on our
sustainability performance, please see pages 34 and 35.
PERFORMANCE – For us and our customers, ensuring predictable,
best in class delivery on every project is non-negotiable for the
Group. We discuss some examples of our achievements during
the year on pages 22 and 23 and we cover our operational and
financial performance in more detail on pages 24 to 29 and pages
46 to 49 respectively.
The key measures of our development as a business are:
• Financial performance.
• Customer wins.
We continue to operate strong risk management processes at
pre-contract and contract stages, ensuring a robust operational
performance. In addition, we have secured further opportunities
with our customers, demonstrating our strategic progress.
Our strategy provides for assured delivery, lower risk contracts
in our orderbook, and a broader business mix.
Costain Group PLC | Annual Report and Accounts 2024
10
We delivered good growth in our adjusted operating margin
1
during 2024, and we have performed well against our operational
targets as outlined in March 2023:
• In H2 24, we had an adjusted operating margin
1
of 4.4%,
exceeding our target of an adjusted operating margin
run-rate of 3.5% to be achieved during the course of FY24,
as we increased effectiveness within the business through
the implementation of our Transformation programme, the
growth of our consultancy services, increased effectiveness in
procurement and ongoing focus on operating costs.
• We remain on track to deliver an adjusted operating margin
1
run-rate of 4.5% during the course of FY25, to be reached
by improving margins within major capital programmes
(construction contracts), further efficiencies from our
Transformation programme, our operating excellence model and
an increasing mix of higher-margin contracts.
• We continue to have an ambition for an adjusted operating
margin
1
in excess of 5.0% as we grow the business.
We have made good progress in securing new work that
demonstrates how we are working in deeper partnerships
with our customers. During 2024 we have:
• Expanded our presence in Water, winning a series of major
contracts including significant AMP8 agreements with:
– Northumbrian Water, where we will shape and deliver its
strategic infrastructure upgrade programme over a potential
12-year period.
– Severn Trent Water, which will see us improve water and
wastewater treatment infrastructure across its portfolio.
– Southern Water, where we won a major AMP8
contract with our joint venture.
– United Utilities, where we will work with other partners
to deliver a £3bn programme to upgrade assets including
water and wastewater treatment sites, pumping stations
and reservoirs.
• Been confirmed as National Highways’ partner for the next
stage of the M60 Simister Island upgrade.
• Been selected by bp’s Net Zero Teesside Power and Northern
Endurance Partnership joint ventures to oversee the
construction of a CO
2
gathering systems for carbon capture
and storage, and by bp’s H2Teesside to design a new hydrogen
pipeline, both for the East Coast Cluster.
• Grown our rail consultancy with work on critical national
programmes such as Northern Powerhouse Rail, Weather
Resilience and R&D programmes.
• Been appointed by Transport for London (TfL) to progress
refurbishment of critical pieces of transport infrastructure, and
expanded our work with Heathrow.
• Won additional project management commissions for significant
defence customers and new nuclear energy contracts.
• And lastly, in December we announced that we were awarded
a major new contract by HS2 as a sole supplier to deliver
tunnel and lineside mechanical and electrical systems, and
that a Siemens Mobility and Costain joint venture was also the
successful bidder to deliver high-voltage power supply systems
for the project.
Outlook
The successful execution of our strategy has delivered a record
increase in our forward work position of £1.5bn to £5.4bn. This,
together with growth on existing frameworks, gives us increasing
visibility and confidence on delivering further progress in FY25 and
FY26, with a step change in performance in FY27 and beyond. We
have already secured approximately 80% of our forecast revenue
for FY25 and our current levels of bidding activity remain high.
Having successfully completed our Transformation programme
and delivered a robust 4.4% adjusted operating margin in H2 24,
we remain on track to deliver an adjusted operating margin run-
rate of 4.5% during the course of FY25, in line with our ambition to
deliver margins in excess of 5.0%.
Alex Vaughan
Chief Executive Officer
10 March 2025
1 See notes 2 to 4 of the financial statements for adjusted metric details
and definitions, and reconciliation to reported metrics.
11Strategic ReportOverview Governance Financial Statements
OurVisionandStrategy
Overview
Our vision is to create connected, sustainable infrastructure enabling people and the planet to thrive, which supports us in our purpose
to improve people’s lives. The strategy we’ve laid out below supports us and delivers against this vision, putting us at the forefront
of meeting the UK’s infrastructure needs with sustainable solutions. The outcomes from our work will improve the UK’s sustainability by
becoming more prosperous, resilient and decarbonised.
Our strategic focus
Our strategic focus is to be an organisation admired by all our stakeholders for how we operate, our sustainability credentials, and the
performance we deliver. Operating profit growth is an important part of this, with a margin target of an adjusted operating profit
1
margin
run-rate of 4.5% during the course of 2025, as well as our strong focus on creating a sustainable future.
Everything we do is rooted in delivery and organised around our customers. We continue to build strategic relationships with Tier 1
customers, forging long-term partnerships, which are supporting us to deliver against our growth ambitions, helping us build an
increasingly resilient customer portfolio and further extend our service offering across the asset lifecycle.
We continue to identify and deliver improvements and standardisations to our approach to enhance productivity and drive predictable
best in class delivery, building off the work we’ve already delivered in recent years through our transformation.
We discuss our progress against People, Planet and Performance areas in more detail on pages 10 to 11, and on pages 18 to 23.
1 See notes 2 to 4 of the financial statements for adjusted metric details and definitions, and reconciliation to reported metrics.
Improving people’s lives
Purpose
Vision
Sustainable future
Strategic focus
Markets and
Customers
Expertise
To create connected, sustainable infrastructure enabling people and the planet to thrive
A more prosperous UK A more resilient UK A decarbonised UK
Working strategically with Tier 1 customers to meet critical national needs
Major capital programmes & consultancy
Road
Engineering
& Construction
Integrated
Transport
Advisory
& Digital Solutions
Energy
Delivery Partner
Rail
Maintenance
& Renewals
Water
Engineering
& Design
Defence & Nuclear
Energy
Transport Natural Resources
A resilient
customer
mix
To be an
admired growing
company
Growth
in strong
markets
Predictable
best in class
delivery
A meaningful
consultancy
service
Costain Group PLC | Annual Report and Accounts 202412
MarketOverview
We are strategically well positioned in our four key UK markets, where there
is commitment to long-term investment in infrastructure: Transport, Water,
Energy, and Defence. Within our Transportation division, we have three key
sectors of operation: Road, Rail and Integrated Transport. The remaining
sectors are managed through our Natural Resources division.
Policy, investment and regulation trends continue to reinforce our strategy, in terms of change in market needs and our need to focus
on expert delivery, predictability and productivity. Further to the Second National Infrastructure Assessment (SNIA) recommendations
(2023), the Government has expressed a desire to invest in infrastructure to drive growth and will be publishing their 10-year national
infrastructure strategy alongside the spending review in June. Recent Government announcements, such as support for expansion plans
at Heathrow airport and confirmation that HS2 will run to Euston, continue to reinforce this message.
Our approach puts us at the forefront of meeting this opportunity to create truly connected, sustainable infrastructure for the good of
UK communities and to improve people’s lives. We collaborate closely with government as well as our strategic partners, supply chain,
and customers in each of our markets to shape the future of infrastructure delivery.
Strategic investment programmes – infrastructure spend
1
Committed
investment
Investment
period 2025 2026 2027 2028 2029 2030
National Highways £27bn 2020–2025 RIS2 RIS3
High Speed Rail £45–54bn 2018–2030 Phase 1 (London–West Midlands)
Integrated Rail Plan £54bn 2022–2050 IRP
Network Rail £43bn 2024–2029 CP7 CP8
Local and regional
transport
c£20bn 2022–2032 City Regional Sustainable Transport Settlements (CRSTS)
c£8bn 2023–2026 TfL 2024 Business Plan
Aviation £8bn+ 2022–2030 Airport expansion
Water £104bn 2025–2030 AMP7 AMP8
Energy
£12bn 2020–2030 10-Point Plan
£30bn 2021–2031 RIIO-2 RIIO-3
£23bn 2023–2028 RIIO-ED2 (Electricity Distribution) RIIO-ED3
Defence
£289bn 2023-2028 Defence Equipment Plan
£27bn 2024-2029 Defence Infrastructure Organisation
Nuclear
£12bn 2024–2027 NDA*
c£20bn 2025–2035 Sizewell C
2
* NDA – Nuclear Decommissioning Authority
1 These investment plans are not all addressable by Costain and there are market opportunities which do not fall under these investment plans available to the Group.
The estimates are as of 31 December 2024.
2 Final Investment Decision (FID) is expected later in 2025.
We estimate that the total annualised market spend for infrastructure in the UK is approximately £70bn per year across all the markets
during the period outlined above, with a c.30% increase from 2024 to 2030 driven by new customer spending cycles.
13Strategic ReportOverview Governance Financial Statements
MarketOverview continued
Road
National Highways is coming to the end
of its £27bn Road Investment Strategy 2
(RIS2) programme, delivering upgrades
across the strategic road network. The
upcoming Road Investment Strategy
3 (RIS3) programme (2025–2030)
is expected to have an increased
focus on renewals, maintenance, and
smaller improvement schemes, as well
as continuing to deliver on the RIS2
imperatives. Our focus is on supporting
National Highways through this to improve
the resilience, environmental impact and
connectivity of the network.
We expect investment in the local road
network in the UK to match that of the
strategic road network between 2025 and
2030 through various local and central
government funding allocations, such as
the City Regional Sustainable Transport
Settlements (CRSTS).
There will be a focus on renewal and
maintenance of the existing road network
for local and regional authorities, working
in greater partnership with National
Highways.
Road committed spend
£27bn
Rail
The medium to long-term investment
outlook for rail in the UK remains
positive, with the SNIA (October 2023)
recommending that spend on rail
enhancements increases to an average
of almost £10bn per year for the next
10 years to drive prosperity across regions
in the UK. There is also expected to be
an increase in spend on renewals and
maintenance to ensure the rail network
is resilient to climate change impacts. We
continue to work with Network Rail and
our partners to shape the future of rail
infrastructure in the UK.
A core part of the delivery of this
investment comes through Network Rail
who have started delivery of a £43bn
investment programme in CP7 (control
period) between 2024 and 2029, focusing
on improving the efficiency, environmental
impact and resilience of the rail network. In
addition, there is an expected HS2 spend
of £45bn–£54bn across its investment
cycle, including confirmation in the latest
budget that the line will continue to
Euston, while investment in local and urban
rail is also expected to increase as regional
mayors are given greater power over
developing the rail network in their region.
Rail committed spend
£142bn+
Integrated Transport
Investment is increasingly being
decentralised, with the new Government
continuing the devolution of powers
to regional authorities, giving mayors
the powers to create unified and
integrated transport systems. The English
Devolution White Paper (December 2024)
announced plans to give mayors greater
authority over transport investment,
bringing decision-making closer to
local communities thereby helping drive
prosperity across the UK.
Decarbonising local transport networks
remains a big driver, with active travel and
low-carbon mass transit options a focus
for investment. Spending is delivered
through a range of funding streams
including the CRSTS, which has committed
c.£20bn for sustainable transport in city
regions until 2032 and a further £2bn to
continue the delivery of West Yorkshire
Mass Transit. In the long-term, the SNIA
forecasts that the share of transport
investment on urban transport will
increase from around 40% today to 50%
in the 2040s.
Airports and ports remain central to a
fully integrated transport solution by
connecting urban centres in the UK
internationally. The volume of airport
passenger numbers in 2024 broke new
records, which, alongside the need to
meet the decarbonisation challenge and
improve the resilience of existing assets,
is driving investment and infrastructure
expansion plans at most UK airports.
Similarly, investment in the development
of ports is seen as a key enabler to
attracting investment to the UK and
delivering energy transition.
Integrated Transport
committed spend
£36bn+
Transportation sectors
Costain Group PLC | Annual Report and Accounts 202414
Water
The UK water sector is entering a
transformative period for the AMP8
investment cycle (2025–2030), with
Ofwat’s 2024 Price Review Final
Determinations outlining a landmark
£104bn investment programme. The
AMP8 programme aims to address new
regulatory requirements, upgrade critical
assets and improve water quality.
The price review includes a significant
investment in drought resilience, with
£50bn allocated for the largest programme
of water supply projects in decades.
A £2bn development fund will kickstart the
Strategic Resource Options (SRO) portfolio
of 30 major infrastructure projects, which
include nine new reservoirs and nine large-
scale water transfer schemes designed to
enhance drought resilience by ensuring
there is enough water to meet the daily
needs of approximately one-third of the
population in England and Wales.
Water committed spend
£104bn
Energy
The transition to clean, sustainable energy
remains central to the UK’s commitment
to be net zero by 2050, and recent
Government backing of Carbon Capture,
Utilisation and Storage (CCUS) schemes
in Teesside, which enabled investment in
the UK's first carbon capture and storage
projects reinforces the momentum in
this space. The RIIO-T3 Business Plan
published by National Grid has unveiled
an unprecedented plan to invest up to
£35bn in the UK's electricity transmission
network from 2026 to 2031, to double the
grid's transmission capacity, facilitating the
integration of renewable energy sources.
Hydrocarbons (oil and gas) will continue to
play a key part in the UK’s energy security
strategy and the establishment of GB
Energy headquartered in Aberdeen signals
a positive outlook.
Energy committed spend
£65bn
Defence and Nuclear Energy
The UK’s defence budget is set to grow
from £56.9bn in 2024/25 to £59.8bn
in 2025/26 reaching a Government
committed target of 2.5% of GDP by 2030.
This growth supports next-generation
capabilities, infrastructure and the
Continuous-At-Sea Deterrent (CASD)
programme, which delivers the UK’s
independent nuclear deterrent. Costain
continues to play a key role in delivering
complex infrastructure solutions for
Defence clients (including both primary
and arms-length bodies), leveraging
our engineering, advisory, and delivery
capabilities to address the sector’s most
demanding challenges.
The Civil Nuclear Energy roadmap outlines
plans to scale nuclear generation to 24 GW
by 2050, meeting 25% of UK electricity
demand, with significant preparatory
investments already underway for delivery
of new large-scale nuclear reactors such
as Sizewell C (Final Investment Decision
(FID) anticipated in 2025). It also includes
the exploration of Small Modular Reactors
(SMRs), which are advancing through
investment/technology selection stages
in support of flexible and scalable energy
production. In February 2025, the UK
Government announced plans to lift
planning restrictions on nuclear sites
and establish a regulatory taskforce to
accelerate the deployment of SMRs.
Defence and Nuclear Energy
committed spend
£348bn
Natural Resources sectors
15Strategic ReportOverview Governance Financial Statements
Procure
Construct
andInstall
Commission
Concept
andAnalysis
Solution
Design
Consultancy
Delivery Partner
Engineering and Design
Advisory and Digital Solutions
Engineering and Construction
Maintenance and Renewals
Deliver
Wecreatesustainableprojectswith
carbon,socialvalueandnatureatthe
coreofourapproach
Shape and Create
Weuseourconstructionand
engineeringexpertisetodesign
therightapproach
OurBusinessModel
Our expert offering enhances
value across the asset lifecycle.
In line with the priorities of the National Infrastructure Commission’s Second National Infrastructure Assessment, the Government’s
five Missions and outline 10-year Infrastructure Strategy, we are strategically well positioned in our four chosen markets of Transport,
Water, Energy and Defence. These markets are essential to ensuring the UK has the infrastructure to meet our critical national needs
for increased prosperity, national resilience and a decarbonised UK.
Costain expertise across the asset lifecycle
Costain Group PLC | Annual Report and Accounts 202416
Operate
Maintain
and
Renew
Optimise
Strategy
and
Delivery
Operate and Optimise
Wehelpoperate,maintainandoptimise
infrastructure,andprovideadviceon
deconstructionanddecommissioning
Our Services
As construction and consulting
partners, we bring together a mix of
experts to engineer solutions to the
most complex infrastructure problems. We
work with customers to anticipate, identify
and meet their challenges, helping us to
deliver pioneering solutions right across
the infrastructure lifecycle, in strategy,
operations and asset creation.
We have specifically chosen to work with
Tier 1 customers who wish to collaborate
to shape, create and deliver their business
plan commitments and investment
programmes, and those that operate,
maintain and optimise infrastructure
through its operational life and into
deconstruction and decommissioning.
We develop strategic solutions to optimise
value and reduce risk; we engineer
innovative solutions that are sustainable,
efficient and practical, and deliver projects
in a safer, greener, faster and more
efficient way.
Our work is underpinned by our
Environmental, Social and Governance
(ESG) goals, as operating responsibly and
with integrity is a key part of our strategy.
We discuss our work in action on pages
18 to 23.
We outline our forward work position
in more detail on page 25 and discuss
the development of our three areas of
consultancy on page 49.
17Strategic ReportOverview Governance Financial Statements
Together we succeed
People
Our commitment is to make
Costain a safe, great and
inclusive place to work.
We’re creating a sustainable
future, with a positive, lasting
legacy for our people and the
communities we support, with
our team of experts delivering
a more prosperous, resilient
and decarbonised UK.
Safety
Safety is a core value at Costain and we aim to eliminate harm
across all of our activities. We saw another strong safety
performance in 2024 with our Accident Frequency Rate hitting
its joint lowest level ever, and our Lost Time Injury Rate and High
Potential Event Frequency Rate both reaching their second
lowest ever scores. This was achieved with more than 30 million
hours worked across more than 170 project sites. Part of the key
to our safety performance is engagement; we know an engaged
workforce is a safer workforce and for nearly a decade we
have been increasing engagement with our projects and driving
down incidents.
Supporting communities
The communities we work with are an integral part of the projects
we deliver, and in 2024 we launched our Social Value Plan,
with a goal of improving one million lives by 2030. Much of the
impact is achieved through our partnerships with more than 40
charities, social enterprises and schools, including the Samaritans,
The King’s Trust and Business in the Community, but there are
localised projects too.
As discussed on page 10, we are also rolling out a social value tool
to help delivery teams consistently measure and improve their
positive social impact.
PurposeinAction
Costain Group PLC | Annual Report and Accounts 202418
In the north of England, the team delivering
the A1 Birtley to Coal House scheme has
engaged with more than 35,000 students,
supported 153 work experience weeks and
welcomed 21 apprentices and graduates,
helping to boost skills and leave a lasting
positive legacy. In recognition of this, the
team won a significant award as discussed
by our CEO on page 10. The same team
also supported a local primary school by
creating a new community garden, and
students from the school were invited
to officially open the project’s North
Dene Footbridge, building collaborative
relationships with the youngest members
of society.
On the west coast, along with our partners
at Sellafield, we refurbished a local youth
centre, providing a safe and fun space
for local young people and the wider
community to enjoy. In London, our A40
team transformed a former nightclub into
a bright and welcoming community hub,
and on our A30 project we coordinated
a fundraising effort for the county’s air
ambulance, as well as supporting the
provision of STEM activities to local
students and appointing local apprentices
to the scheme.
We also take our responsibility to support
local businesses seriously. We regularly
host free events to help prospective
supply chain participants get involved
in infrastructure projects around the
UK, enabling them to take advantage of
the potential opportunities on offer and
support a more prosperous UK.
Ensuring the best team
As our chair notes on page 6, our people
are at the heart of everything we do,
with great importance placed on their
personal and professional growth as
evidenced by two new development
programmes. The leadership programme
strengthens leadership capabilities and
supports our senior talent pipeline, while
our front-line supervisors programme
takes talent in operative roles, often from
underrepresented groups, and helps
them transition into supervisory roles.
We encourage professional development
at all stages of our people’s careers,
and cover the full cost of professional
development charterships which means
people ‘earn and learn’ whilst developing
transferable skills. This sets both them and
the Company up for success and they can
act as mentors to others.
This is supported by our new HR system
which has greatly improved data quality
and transparency, allowing us to better
support career development. It also
enables us to streamline and automate
processes, making us more efficient, and
supports future growth through improved
workforce planning (further details on
page 81).
And we listen to our people to understand
what we do well and where we can
improve, using employee networks, Your
Voice forum and our annual engagement
survey, where we maintained our rating as
a ‘very good’ company to work for after
receiving a record response. We go into
more detail on page 83.
Future talent
In line with the strong growth we’ve
already seen and expect in the future,
we’re increasing our early careers intake
of apprentices, graduates and internships
with more than 180 places available. We’re
offering a variety of roles across multiple
sectors, and for the second year running,
have received Platinum status with The
5% Club for our investment into early
careers. This drive for the best talent will
support Costain’s success for decades to
come, and we’ll continue to develop them
throughout their time with us. You can
find more detail on our talent pipeline and
investment in people on pages 84 and 85.
Inclusive employment
2024 saw us continue the success of our
Empower programme, which supports
women to progress into senior roles,
and we were named in The Times Top
50 Employers for Gender Equality. We
were recognised as taking a proactive
approach to tackling inequalities in the
workplace with actions including greater
transparency around job grades, rewards
and benefits, and a new career-path
framework which offers more visibility
around growing a career.
Gender equality was also a key focus
when we made significant improvements
to our parental leave policy, including
enhanced paternity leave. Some of
our people have long-term caring
responsibilities so we also introduced
enhanced carers’ leave, giving them up to
five days’ paid leave a year to look after
their loved ones.
Inclusion was at the heart of a project with
the Royal Academy of Engineering looking
at how those with a personality preference
for introversion or extroversion perceived
their treatment and opportunities. This
has enabled leaders to increase inclusion,
and helped drive wider understanding
across Costain.
And our commitment to equity was
recognised with our validation as a
Disability Confident Leader by the
Business Disability Forum. We were praised
for having a forward-thinking approach
to inclusivity and for making impactful
steps to foster disability inclusion within
the organisation.
Awarded for performance
Excellence from our people has led to a
number of awards. Alongside EDF (UK) we
were named the Global Project Controls
Consultancy of the Year, while one of
our apprentices was crowned UK Project
Controls Apprentice of the Year. One of our
engineers also won the British Tunnelling
Society 2024 Harding Prize, which
celebrates young tunnelling engineers,
and, as part of the SMP Alliance, we won
the ‘Impact in Roads’ category at this
year’s New Civil Engineer Awards.
A vital part of our future growth is our
relationship with our suppliers, and we
were awarded the CIPS Procurement
Excellence Standard in recognition of
our fair payment practices. On the A40
we were given an Excellent rating by
the Considerate Constructors Scheme,
mitigating the impact of our works by
liaising with TfL’s maintenance contractor
to carry out works simultaneously,
minimise road closures, and share site
compounds. The M6 J21a-26 team also
won a Gold Considerate Constructors
Award at the National Site Awards.
And our relentless focus on safety was
recognised by The Royal Society for
the Prevention of Accidents with our
Energy and Defence teams awarded the
Patron’s award – the highest possible
accolade – after achieving 33 consecutive
Gold awards.
19Strategic ReportOverview Governance Financial Statements
Together we care
Planet
We’re creating a decarbonised
UK through energy transition
solutions alongside increased
biodiversity and a cleaner
environment. Creating a
sustainable future is simply
part of who we are.
Energy transition pioneers
We are at the forefront of the energy transition with expertise in
both carbon capture and hydrogen. On Teesside, we completed
the front-end engineering design (FEED) for the East Coast
Cluster’s onshore CO
2
gathering network, which will have an initial
capacity to transport around 4m tonnes of CO
2
a year for storage
under the North Sea. We were then selected by Net Zero Teesside
Power (NZT Power) and the Northern Endurance Partnership
(NEP), both joint ventures operated by bp, as specialist partners
for this landmark scheme. NZT Power aims to be the world’s first
commercial scale gas-fired power station with carbon capture
technology and Costain will execute the detailed design of
the carbon capture network before managing its procurement
and construction.
We have also been awarded a multimillion-pound FEED contract
by bp for the new hydrogen pipeline network in Teesside. The
network will deliver purified and dehydrated hydrogen to industrial
end users, with the aim of replacing natural gas consumption,
establishing the hydrogen economy and enabling decarbonisation
across the region.
PurposeinAction
Costain Group PLC | Annual Report and Accounts 202420
Our expertise in energy transition is also
why we were selected by Wales & West
Utilities (WWU) to lead a study exploring
how hydrogen refuelling stations can
be integrated into the UK’s existing gas
network. It will consider hydrogen as
an alternative for heavy-duty vehicles
and we’re also helping WWU to support
its industrial and commercial gas users
to switch to low carbon solutions
like hydrogen.
The energy transition also needs
substantial investment in connectivity.
We are well placed to support this upgrade
of the UK’s energy transmission network
through our in-house engineering and
delivery capabilities, and were accepted
to a new National Grid framework in
autumn 2024. We anticipate supporting
on a range of vital high-voltage projects
in the coming years.
Driving decarbonisation
The move towards net zero is at the
heart of many of our projects, such
as our leading involvement in HS2,
which is being designed and built to be
the most sustainable high-speed rail
network in the world, with the trains
powered by zero carbon energy from
day one (more detail on that project in
the following section on Performance).
It also features in our detailed design
and construction of a traffic-free bridge
over the A30 just outside Truro. The
Chiverton bridge provides a safe crossing
point for pedestrians, cyclists and horse
riders, boosting local connectivity and
encouraging carbon-free journey choices.
We saved around 200 tonnes of CO
2
on
the project, a 30% reduction compared
with the concept design, and achieved
a BREEAM Excellent rating for the
commitment to sustainability.
Our new head office was also selected
with net zero in mind. The building
has the highest energy efficiency
certification, space for more than
300 bicycles, is accessible from mainline
transport hubs and was awarded a Gold
rating by RICS in recognition of its
environmental performance.
As part of our drive to lower emissions,
we completed one of the UK construction
sector’s first pilots to test the use of
electric vans on major project sites. We
also trialled a new method for managing
waste from industrial cooling by
compressing it, making it easier and safer
to handle whilst lowering transportation
demand and emissions by as much as 70%.
Of course, the drive to net zero needs
robust data, and we successfully trialled a
carbon tracker to improve reporting. This
captures emissions from across the supply
chain with ‘hotspots’ of high emissions
highlighted to enable project managers
to drive greater reductions. As noted by
our CEO on page 10, our approach to
decarbonising infrastructure has been
verified to the leading PAS 2080 standard.
We also achieved Gold status in the
Supply Chain Sustainability School’s Plant
Charter, building on our previous Silver
status, and strengthened our sustainability
engineering team to drive excellence in low
carbon and nature-based solutions.
Positive biodiversity
We directly target increased biodiversity
through our nature positive approach.
On the A30, where, together with the A1,
we tackled a congestion and pollution
blackspot, survey work identified potential
disruption to bat habitats, so we built a
specially constructed bat barn. Lesser
horseshoe bats are already roosting in the
barn, which was constructed with locally
sourced Cornish stone and slate. And the
Chiverton Bridge referenced above was
accompanied by new habitats which will
mean a nearly 220% Biodiversity Net Gain.
The A30 work was carefully planned to
protect the ecology of the area, and a
total of 33 multi-species crossing points
were constructed to assist the habitats
and journeys of animals such as bats,
otters, badgers and reptiles. 150,000
trees have been planted, and an additional
4.5 hectares of new woodland created.
On our joint venture with MWH Treatment,
we successfully installed Europe’s largest
inlet screens as part of the upgrade works
at Southern Water’s Horsham Wastewater
Treatment Works. The project will help
protect the River Arun for years to come
and offer habitat enhancements with a 9%
gain in biodiversity.
Environmental enhancement
Our leading position in the water sector
(more detail in the Performance section
overleaf) means we are already having
a large, positive impact on the cleanliness
of the UK’s rivers, and will continue to
do so for many decades. On Thames
Tideway, London’s new super sewer, our
joint venture team in the eastern section
have worked to bring it into operation and
protect the river from sewage overflows;
the final shaft wall has been removed, a
1,200-tonne concrete lid safely lifted onto
a 70-metre-deep shaft, and the tunnel is
now connected.
Our work with communities often ties
in with our environmental goals; as part
of our work on the M6 upgrade, we’ve
created a water run-off system at a
community garden in Eccles which will
capture 20,000 litres of water each year
and make the garden self-sufficient for
the watering of plants. The garden offers
educational workshops for local residents
and schools, further increasing the
benefits to the local community.
Of course, in many parts of the UK the
effects of climate change are already
being felt. We’ve continued to advise and
support Network Rail with its weather
resilience programme, which uses data to
identify targeted interventions to improve
the safety of our rail network.
And we received prestigious recognition
for our approach when we obtained the
London Stock Exchange’s Green Economy
Mark. This identifies companies that
generate at least half of their revenue from
products and services that contribute to
the green economy. The Mark is only held
by around 6% of companies on the London
Stock Exchange.
21Strategic ReportOverview Governance Financial Statements
Together we deliver
Performance
We’re creating a more
prosperous UK with improved
productivity and greater
resilience. Strong financial
performance, with a relentless
focus on winning new work and
predictable best in class delivery,
are all vital parts of creating a
sustainable future.
Increased forward work
We give more details of our strong financial performance in the
previous sections, including the significant growth in our forward
work across our sectors. We’ve already been supporting our water
sector customers with their Asset Management Period 7 (AMP7)
projects, helping major customers hit all of their project regulatory
commitments due in 2024, and we’re on schedule to deliver
against commitments in 2025, too. This high performance, and our
collaborative approach, has been recognised with significant new
contracts in 2024. Northumbrian Water has appointed us to shape
and deliver its strategic infrastructure upgrade programme during
AMP8, including the design and construction of new water and
wastewater treatment programmes and projects.
We’ve been asked by Thames Water to upgrade strategic
treatment assets which will improve the ability to treat
increasing volumes of sewage, and to support with the design
of a new reservoir in Oxfordshire, as well as with the delivery
of AMP8 upgrades.
PurposeinAction
Costain Group PLC | Annual Report and Accounts 202422
United Utilities have appointed us to help
deliver its strategic investment programme
and we also continue as their Managed
Service Provider. We’re supporting
Yorkshire Water with their health and
safety, environmental and technical
assurance, and with Southern Water,
we’re improving the resilience of the local
water supply and upgrading wastewater
treatment works. We’re also shaping and
delivering Southern Water’s strategic asset
upgrade programme, continuing our long-
standing relationship with them as well as
with Anglian Water, where the Strategic
Pipeline Alliance has reached the halfway
point for pipelaying.
In late 2024, our performance and expertise
on HS2 was recognised when we were
awarded two substantial new contracts
to deliver mechanical, electrical and high-
voltage power systems for the new line.
We also continue to expand our portfolio of
consultancy work for Network Rail and DfT
through our framework contracts. These
include being a key partner to protect
the rail network from extreme weather
(as referenced in the Planet section above)
and working with Network Rail to improve
train safety and performance.
We significantly increased the volume of
our work at Heathrow as we support the
UK’s biggest airport with its asset renewal
and construction projects through the H7
framework. We also continue to support
other aviation customers at East Midlands,
Gatwick, Manchester and Stansted airports.
And we were appointed by TfL to
progress major refurbishment projects
at Gallows Corner and Brent Cross
which will ease congestion and improve
the safety, reliability and quality of
passenger journeys. We also commenced
the next phase of delivery work on the
A40 Westway and continue to support
TfL’s CCTV service. In Yorkshire and the
North East we’re carrying out a 15-year
programme on the road network, including
responses to severe weather, and we are
also supporting Bradford Metropolitan
District Council in the development of their
local infrastructure plan.
Best in class delivery
We’re continuously finding new ways
to drive efficiencies for our customers,
saving them time and money. As
mentioned in the Planet section above,
we successfully delivered a new stretch
of A30 dual carriageway in Cornwall; this
has significantly reduced congestion,
particularly during the peak tourist season,
improving journey time and reliability for
local residents, businesses and those
visiting the area. Despite the pandemic and
an unprecedented number of Met Office-
classified storms, three new bridges, ten
new underpasses and underbridges, and
more than 2.6 million cubic metres of
earthworks were successfully completed.
We also safely dismantled the Tolgroggan
bridge and removed the old ‘Chivvy’
roundabout, Cornwall’s worst accident
black-spot.
We also improved the lives of motorists
using the M6, with an extra lane in both
directions successfully progressing to full
70mph operations, providing extra capacity,
reducing congestion, improving travel
times and making journeys more reliable
for the estimated 120,000 vehicles that
use the route each day. The project has
introduced safety enhancements, including
stopped vehicle detection which uses radar
technology to alert the control centre.
In water, at our Severn Trent Spernal
works, we constructed the pump station
using in-house resource with pre-cast
segments; this was quicker and safer,
and saved 40% versus contractor prices.
Whilst in the East of England, where we’re
replacing approximately 340km of gas
main each year for Cadent, we passed the
year’s target more than a month ahead of
schedule. This performance was recognised
with our contract extended by three years.
At Heathrow, we recently completed
the dismantling of Starlight Point, which
supported the building of Terminal 2,
removing all 307 modules intact and
allowing them to be repurposed for future
use whilst ensuring no disruption to
airport operations.
On HS2, we’ve successfully completed
the western section of the Copthall Green
Tunnel. Our innovative ‘roof traveller’ created
a temporary deck to support the construction
of the concrete roof, before being lowered
and moved to the next section. This only
needed four people to operate, saving
nearly £5m, and offered considerable
safety benefits, cutting the number of
working-at-height hours by 90,000.
And at HS2 South Ruislip, the team used
offsite fabrication to install the first
riser in three days instead of four to six
weeks, improving safety with 6,000 hours
removed from site and an £8m saving,
whilst at West Ruislip the team adopted
offsite manufacturing for drainage
solutions, which is expected to generate
40% cost savings.
We’re also helping drive productivity for
the UK as a whole. A study we carried
out for the Department for Transport
estimates the greater adoption of
connected and autonomous plant could
add £417bn to the UK economy by 2050,
and we helped to enhance UK border
infrastructure, assisting the successful
delivery of the £200m Port Infrastructure
Fund project.
Shaping the future
Our harnessing of technological innovation
is a key part of driving value for our
customers. In the Water sector, where we
have won a significant amount of new
work as detailed above, the scale of AMP8
investment will see companies need to
evaluate ever-more complex sets of data.
We’re helping Northumbrian Water tackle
this problem by developing a platform
which is expected to reduce the need for
wastewater works managers to repeatedly
provide and analyse operational data,
reducing time spent on data entry which
can be almost half of the working week.
We’ve also been using technology to solve
problems for National Highways. On the
M60 Simister Island upgrade, which will
create more reliable and safer journeys
into and around Greater Manchester, we’re
developing an innovative modular viaduct
which will minimise disruption to the local
community during construction. On the
M6 we optimised traffic management,
resulting in 2,100 fewer delayed journeys,
whilst also improving user experiences by
analysing more than a quarter of a million
pieces of customer feedback.
We have also used technology to make
concrete pours more efficient and
environmentally friendly. Usually these
are tested by removing samples; instead,
our engineers used sensors to track the
strength of setting concrete. This reduced
the time that formwork was in place by
a third, with one project avoiding the
destructive testing of 500 samples.
And we’ve helped develop the first robotic
solution to install mechanical and civil
services in tunnels. The system can select
brackets, locate where they need to
be mounted and install them. It reduces
safety risks, increases productivity by
40%, reduces costs by 30%, and cuts plant
movements by 40%, decreasing emissions.
We’ve also helped develop a real-time
digital assurance system to offer a fully
automated solution.
23Strategic ReportOverview Governance Financial Statements
OperationalReview
We are creating a sustainable
future through the delivery
of infrastructure.
“ Our strategic focus on critical
growth markets, where together
we are creating a sustainable
future as a more prosperous,
resilient and decarbonised UK,
has resulted in contract wins
across all our sectors.”
Alex Vaughan
Chief Executive Officer
We are continuing to perform strongly and have good momentum, including
increasing both our margins and our forward work position, creating a more
resilient, broader customer mix and continuing to grow our consultancy services.
We have delivered a 7.5% increase in adjusted operating profit
1
with a £5.4bn forward work position in the year.
Within our chosen markets we work with a growing number of Tier
1 customers who choose to work with their partners on strategic
five-to-ten-year programmes of work, aligned to us meeting their
five-year business plan outcomes. The strategic nature of these
contracts allows us to build strong, long-lasting, valued relationships;
to broaden our service value and for us to maintain consistency
and continuity of workflows over the business plan period. Both
ensure a good quality of work, service and an optimal risk profile.
Reported revenue was £1,251.1m in FY24 (FY23: £1,332.0m).
There was an increase in Natural Resources revenue in all
three sectors, Water, Defence and Nuclear Energy, and Energy.
In Transportation, as expected, we saw reductions in Road
volumes, due to the completion and delays of certain projects,
and in Rail due to the successful completion of our main works
at Gatwick Station. We had increased revenue in Integrated
Transport including growth in our Heathrow H7 contract and
new contracts with TfL.
Adjusted operating profit
1
grew by 7.5% to £43.1m (FY23: £40.1m)
and the adjusted operating margin
1
increased to 3.4% (FY23: 3.0%),
driven mainly by the improved performance in Transportation
resulting from a better margin mix derived from newer contracts,
and increased margin in Natural Resources, which has a greater
mix of consultancy services. We discuss our revenue from
consultancy services on page 49.
Reported operating profit increased to £31.1m (FY23: £26.8m).
Net finance income was £5.4m (FY23: £4.1m), driven by higher
interest income from bank deposits and lower bank charges.
Adjusted profit before tax
1
increased 9.7% to £48.5m (FY23:
£44.2m), with adjusted basic earnings per share
1
(EPS) up by
19.7% at 14.6p (FY23: 12.2p). Reported profit before tax was up
18.1% at £36.5m (FY23: £30.9m), while reported basic earnings
per share (EPS) was up 39.5% at 11.3p (FY23: 8.1p).
Costain Group PLC | Annual Report and Accounts 202424
2024 £1,251.1m
2023 £1,332.0m
2022 £1,421.4m
Revenue
£1,251.1m
Adjusted operating profit
1
£43.1m
Adjusted operating profit margin
1
3.4%
Cashflow and liquidity
Our net cash position at the end of FY24 was £158.5m (FY23:
£164.4m) which included the costs of our £10m share buyback
programme which concluded in November 2024.
We expect our FY25 year end net cash position to be in line with
current market expectations of around £180m, as the underlying
net free cash flow from the business is expected to benefit from
positive working capital timings during the year, offset by the
unwinding of £25m of positive working capital timing benefits
accumulated since the end of FY22, as previously reported.
Cash from operations in FY24 was £41.7m (FY23: £69.6m), resulting
from increased adjusted operating profits offset by year-end
timings of certain cash receipts at the end of year FY23 and FY24,
together with some end of contract cash outflows in FY24.
Adjusted free cash flow in FY24 of £27.1m (FY23: £72.0m) was lower
than in the same period last year largely due to the timing of year-
end working capital and higher tax and capital expenditure payments
as we invest in new systems and higher cash flows on adjusting
items, partially offset by lower pension deficit contributions.
During FY24 we paid 98% of invoices within 60 days (FY23: 98%).
In January 2025 Costain was re-confirmed as one of the fastest-
paying lead contractors in construction on an average days-to-
pay basis following the submissions to the Government’s Duty to
Report on Payment Practices and Performance.
Business model resilience
Costain enjoys good forward visibility with a strong high quality
forward work position. Our forward work position, which is our
combined order book and preferred bidder book, stood at £5.4bn
at period end (H1 24: £4.3bn; FY23: £3.9bn), representing more
than four times our FY24 revenue.
The quality of this forward work reflects the nature of the work
being long-term programmes, with no single stage lump sum
contracts, and predominated by target cost contracts where the
scope of work, design and cost are developed and agreed with
the client.
Our order book stood at £2.5bn at period end (FY23: £2.1bn;
H1 24: £1.8bn). The order book evolves as contracts progress and
as new contracts are added at periods aligned to our customers’
strategic procurement windows, which are typically every five
years. The order book does not therefore provide a complete
picture of the Group’s potential future revenue expectations.
We have a continuing shift towards the preferred bidder book
away from the order book as we continue to secure long-term
(five-to-ten-year) framework positions with our customers,
especially in the water sector, providing a reliable and long-term
stream of future work.
The preferred bidder book increased to £2.9bn at period end
(FY23: £1.8bn; H1 24: £2.5bn) and includes contracts in Water,
Rail, Energy, Defence and Nuclear Energy, Road and Integrated
Transport, including Heathrow. The preferred bidder book
comprises contracts for which we have been selected on
frameworks where a further works order is required prior to
the works commencing.
We note that some of our framework and consulting revenue is
not recorded in our order book, or preferred bidder book, as it is
undefined and is expected to represent an increasing proportion
of our future revenue.
We have around £950m of secured Group revenue for FY25 at
the end of the year, representing approximately 80% of market
forecast revenue for the period.
1 See notes 2 to 4 of the financial statements for adjusted metric details and definitions,
and reconciliation to reported metrics.
2024 £43.1m
2023 £40.1m
2022 £36.3m
2024 3.4%
2023 3.0%
2022 2.6%
25Strategic ReportOverview Governance Financial Statements
OperationalReview continued
Transportation saw
an increase in operating
profit and margin.
“ The division saw an increase
in operating profit and margins
against the backdrop of lower
revenue due to delays and
completion of a contract in Road.”
Jonathan Willcock
Managing Director of Transportation
Transportation
Our revenue in FY24 was mainly from a number of complex
project delivery schemes for HS2 and National Highways. We
are transitioning towards a better-balanced portfolio, benefitting
from activities in Rail, Road, Aviation and Local Government.
As expected, revenue of £845.8m was down 10.3%, reflecting
lower volumes in Road due to the completion of some contracts
and delays to the start of a new contract, and in Rail due to
the completion of our main works for Gatwick Station. We saw
increased revenue in Integrated Transport due to our expanding
work at Heathrow and with TfL.
Road revenue declined by 23.1% in FY24 compared with
the prior year, as expected, driven by a reduction in schemes
revenue as they near completion. As a strategic partner
for National Highways, we support their key investment
programmes through the Regional Delivery Partnerships (RDP)
major projects frameworks, the Smart Motorways Programme
(SMP) Alliance, the SPaTs2 consultancy framework, and
Area 14 highway maintenance.
On RDP, in Cornwall we opened to traffic the widened A30 dual
carriageway between Chiverton and Carland Cross on schedule.
The upgrade to the A1 around Newcastle progressed well with
opening to traffic of the new Birtley to Coal House section in
December 2024. As previously indicated, during 2024 we agreed
the scheme budget for the M60 Simister Island scheme, and have
progressed to the detailed design phase, and are continuing to
deliver highway maintenance activities on our Area 14 contract.
Within the SMP Alliance, our delivery of the M6 Junction 21a-26
smart motorway upgrade opened to traffic in December 2024,
and we are supporting the National Emergency Area Retrofit
programme on the M1 for smart motorways through design and
delivery of additional stopping areas.
We have a growing pipeline of opportunities in Road for local
government bodies, as well as National Highways, and see good
long-term prospects in this market.
Costain Group PLC | Annual Report and Accounts 202426
Safety
Safety is always our number one focus, and we aim to
eliminate harm across all of our activities. We saw another
strong safety performance in 2024 with our Accident
Frequency Rate hitting its joint lowest level ever, and our
Lost Time Injury Rate and High Potential Event Frequency
Rate both reaching their second lowest ever scores. This
was achieved with more than 30 million hours worked
across more than 170 project sites. Part of the key to our
safety performance is engagement; we know an engaged
workforce is a safer workforce and for nearly a decade we
have been increasing engagement with our projects and
driving down incidents.
Discover more on our website / www.costain.com/people
Rail provides a mixture of complex programme delivery and
consultancy to key clients, mainly HS2 and Network Rail. Revenue
decreased by 9.1% in FY24, principally because of the completion
of our main works at Gatwick Station in the period. The Skanska
Costain STRABAG (SCS) JV contract to construct the southern
section of HS2, which has a twin bore tunnel, has seen the first of the
four tunnel boring machines (TBM) complete its drive with the other
three TBMs making good progress and due to complete their drives
during 2025. The HS2 programme is currently navigating a change
in its programme delivery strategy with an integrated programme
being developed and work is expected to commence on a revised
programme with the supply chain, including the SCS JV.
We continue to expand our portfolio of work for Network Rail and
DfT through our framework contracts, where we are providing
professional consulting services. These include being a key partner
to protect the rail network from extreme weather, supporting
Bradford Metropolitan District Council in the development of their
local infrastructure plan, and working with Network Rail to improve
train safety and performance.
In December 2024, we announced that Costain had won two
major system contracts with HS2. The first was as a sole supplier
to deliver tunnel and lineside mechanical and electrical systems
for HS2, with a total contract value worth a minimum of £400m
to Costain. The second was with a Siemens Mobility and Costain
Limited 50/50 Joint Venture which will deliver high-voltage power
supply systems for the HS2 project valued around £300m to the
joint venture. The contract timing for these contracts is being
assessed in line with the developing HS2 integrated programme.
Integrated Transport provides a mix of consulting and
complex project delivery to sub-national transport bodies, central
government and to Aviation customers. Revenue increased by
92.7% in FY24 on the prior year, reflecting growing work volumes
at Heathrow and with TfL.
During FY24, we continued to work on the Gallows Corner Flyover
Detailed Design & Build contract and on the design phase for
Brent Cross for TfL. We also commenced the next phase of
delivery work on the A40 Westway and continue to support TfL’s
CCTV service.
We also increased the volume of our work at Heathrow to shape,
create and deliver asset renewal and construction projects through
the H7 Terminal Asset Renewal Partner and Major Project Partner
frameworks. We also continue to support other aviation customers
at East Midlands, Gatwick, Manchester and Stansted airports. We
continue to work with a number of local and regional government
organisations to deliver engineering and professional services.
We expect that Aviation, Ports, local and devolved transport
bodies will offer strong growth opportunities for the business.
Divisional results – Transportation
FY24 adjusted
1
FY23 adjusted
1
Adjusted1 change
Road 307.3
399.5 -23.1%
Rail 454.9 500.2 -9.1%
Integrated Transport 83.6 43.4 92.7%
Total revenue 845.8 943.1 -10.4%
Operating profit/(loss) 29.9 28.0 6.9%
Operating margin 3.5%
3.0% 0.5%pt
1 See notes 2 to 4 of the financial statements for adjusted metric details and definitions, and reconciliation to reported metrics.
27Strategic ReportOverview Governance Financial Statements
OperationalReview continued
Natural Resources continued
to increase revenue and
profitability in 2024.
“ The division increased revenue,
operating profits and margin, and
secured significant volumes of
new work.”
Sam White
Managing Director of Natural Resources
Natural Resources
Revenue increased by 4.2% to £405.3m, reflecting growth in
Defence and Nuclear Energy and in Water with stable revenues in
Energy. Divisional adjusted operating profit
1
increased to £23.8m
(FY23: £21.8m), and adjusted operating margin
1
increased by
0.3pt to 5.9% due to a higher mix of consultancy revenue.
Water delivers a broad range of services to improve asset
and operational resilience across the Water sector, together
with decarbonisation capabilities. Revenue increased by 2.5%
as the industry moves from AMP7 to AMP8 projects. We have
good visibility across our ongoing five-year AMP7 programmes
through to 2025, and our AMP8 projects for the period 2025-
2030, where we expect to see strong growth in this area. Our
work for Tideway, where in a joint venture we are responsible for
the eastern section, moved into the final stage of the programme
commissioning and the tunnel became operational.
The breadth of our service offering continues to grow with
work including wastewater to gas, water quality assurance and
water treatment, as well as design, maintenance, capital delivery
and strategic resource options. We continue to work on capital
delivery programmes for Anglian Water, Severn Trent Water,
Southern Water, and Thames Water in AMP7.
We have also started clay compaction trials and the provision of
constructability advice to support the design of a new reservoir in
Oxfordshire for Thames Water.
We have strongly increased our presence in Water in the year,
with the combination of the rollover of current contracts, contract
extensions and new customer wins. During FY24 these include:
major AMP8 contract wins with Northumbrian Water, United
Utilities and Southern Water; finalising contract extensions with
Severn Trent Water and Thames Water; and the provision of
programme management services through to 2032 as part of a
major framework for Thames Water. Our CMDP+ joint venture with
MWH Treatment was awarded contracts by Southern Water as
part its AMP7 investment programme.
Energy revenue increased by 1.3% in FY24 on the prior. We
expect significant long-term growth in this sector given the
requirement for energy infrastructure investment to support
economic growth, tackle climate change and enhance the natural
environment. We provide our customers in this sector with a range
of services including engineering design, managed services and
programme management, solving our customers’ complex energy
challenges through excellence in engineering and delivery.
Costain Group PLC | Annual Report and Accounts 202428
Our work supporting the water sector
We’ve already been supporting our water sector
customers with their Asset Management Period 7 plans,
helping major customers hit all of their project regulatory
commitments due in 2024, and we’re on schedule to
deliver against commitments in 2025, too. This high
performance, and our collaborative approach, has been
recognised with significant new contracts.
Discover more on our website / www.costain.com/people
Our strategic focus areas are energy transition (hydrogen and
carbon capture), energy resilience (brownfield modifications for
enhanced longevity and performance, energy storage and carbon
reduction) and energy connectivity (gas and electricity networks).
We have been awarded the contract to oversee and manage the
engineering, procurement and construction of the onshore CO
2
gathering systems for the £4bn East Coast Cluster investment.
We have commenced work on the detailed design and delivery
phase of bp’s Net Zero Teesside Power and Northern Endurance
Partnership joint ventures of the interconnecting CO
2
pipeline and
associated utilities, and the H2Teesside new hydrogen pipeline,
as an augmentation of our scope for the East Coast Cluster. In
energy resilience, we have been supporting a number of clients
including INEOS FPS and Dana Petroleum with studies and design
activities to progress their sustainability initiatives.
In energy connectivity, we continue to manage the safety-
critical gas mains replacement programme for Cadent in the
East of England, the contract for which has been extended by
three years. We are also providing pre-feed assessment for a
green hydrogen project which we expect to increase in volume
during 2025.
We continue to support bp as it progresses the wider de-
carbonisation of the local energy supply and pursues innovative
carbon capture and storage solutions and were selected by
Wales and West Utilities to lead a series of studies to develop their
hydrogen vision.
We see growth in project delivery and opportunities in supporting
our long-standing petrochemical customers in decarbonising
their midstream operations through large scale energy switching
engineering projects, including hydrogen generation and
transportation. In addition, we expect to see growth in the energy
transmission market.
Defence and Nuclear Energy supports several public and
private sector organisations in a variety of customer-side, delivery
partnership roles, across the UK Defence Nuclear Enterprise.
Revenue increased by £9.6m, 9.8% on the prior year, driven by a
growth in demand within our current delivery partnership roles.
During FY24, we were awarded two new framework contracts
in the nuclear energy sector as previously reported and expect
further growth in this area.
We are currently well positioned across the Defence Nuclear
Enterprise and our ambition is to be the delivery partner of choice
for the Ministry of Defence (MoD), and its prime contractors,
for its strategic infrastructure needs.
Divisional results – Natural Resources
FY24 adjusted
1
FY23 adjusted
1
Adjusted1 change
Water 251.5
245.3 2.5%
Energy 46.2 45.6 1.3%
Defence and Nuclear Energy
2
107.6
98.0 9.8%
Total revenue 405.3
388.9 4.2%
Operating profit/(loss) 23.8
21.8 9.2%
Operating margin 5.9% 5.6% 0.3%pt
1 See notes 2 to 4 of the financial statements for adjusted metric details and definitions, and reconciliation to reported metrics.
2 Defence and Nuclear Energy includes nuclear-related revenue previously included in Energy, following the Natural Resources reorganisation.
29Strategic ReportOverview Governance Financial Statements
2024 14.6p2024 3.4% 2024 2024 £43.1m
2023 £40.1m
2022 £36.3m 2022 9.9p2022 2.6% 2022 £72.9m
2023 12.2p2023 3.0% 2023 £72.0m
£27.1m
KeyPerformanceIndicators
Our KPIs are aligned with how we measure our performance against our strategic priorities.
These reflect our vision of creating infrastructure that helps people and the planet to thrive,
while also ensuring that we deliver for all our stakeholders.
Financial metrics
Relevance
Measure
Target
Performance
Our business is going through
a transformation as we build on
being a Tier 1 contractor, in order to
provide a unique offering across the
asset life cycle, which is reflected
in an increased adjusted operating
profit
1
and improved margin. The
infrastructure investment programme
being undertaken by the UK
Government is for the more traditional
type of construction work, for which
margins are lower, and we also saw
the impact of inflation on pricing.
As our business becomes more
efficient and revenue mix shifts
to include more higher-margin
consultancy and digital work, we
expect this to be reflected in the
operating profit margin. We have
identified areas for operational
efficiency, some of which we
anticipate adding to the bottom line
and supporting our margin. This is
calculated as adjusted operating
profit divided by adjusted revenue.
We believe that EPS, while not
perfect, is an accessible measure
of the returns we are generating
for our shareholders and reflects
both revenue growth and operating
profit margin. It also acknowledges
that historically, shareholdings
have been diluted through share
issues. EPS is calculated based on
the adjusted profit attributable to
equity shareholders
1
, divided by the
basic weighted average number
of ordinary shares ranking for any
dividend in the period.
In a business with small operating
margins, profitability alone is not an
adequate measure of performance
or balance sheet strength; it is
possible to deliver better margins,
but poor value for shareholders if
that profit is not converted into cash.
Adjusted operating profit.
1
Adjusted operating profit margin.
1
Adjusted basic earnings
per share.
1
Adjusted free cash flow is defined
as net cash flow from operating
activities, excluding cash flow
relating to adjusting items, less
capital expenditure.
Double-digit compound growth
in the medium term.
We exceeded our target 3.5%
adjusted operating margin
1
run-
rate during the course of FY24,
and have a 4.5% run-rate target
during the course of FY25, and our
ambition is to reach in excess of
5.0% thereafter.
We target EPS growth in line
with our strategy to grow
operating profit.
Cash conversion rate of 90%.
Adjusted operating profit
1
was
£43.1m (FY23: £40.1m) and adjusted
operating profit
1
growth was 7.5%,
reflecting increasing efficiencies
in the business and growth in
Natural Resources.
Adjusted operating margin
1
was
3.4% for the year and 4.4% in the
second half as we saw improvement
in the business driven by growth
and increased margin in the Natural
Resources division.
Improvement in EPS was driven by
overall improvement in profitability.
Free cash flow in FY24 reflected
year-end timings of working capital,
as well as higher tax and capital
expenditure payments as we invest
in new systems, partially offset by
lower pension deficit contributions,
see page 47 for more details.
1 See notes 2 to 4 of the financial statements for adjusted metric details and definitions, and reconciliation to reported metrics.
Adjusted operating
profit
1
£43.1m
Adjusted operating
profit margin
1
3.4%
Adjusted basic earnings
per share
1
(EPS)
14.6p
Adjusted free
cash flow
£27.1m
Costain Group PLC | Annual Report and Accounts 202430
2024 0.11 LTIR 2024 £410k 2024 278,218tCO
2
e
2023 0.12 LTIR 2023 £460k 2023 281,355 tCO
2
e
2022 0.09 LTIR 2022 £391k 2022 320,722 tCO
2
e
Non-financial metrics
Effective health and safety
management systems are critical in
preventing incidents which could
cause injury to people and damage
to property and reputation.
The main outcome metric we use to
measure safety performance is Lost
Time Injury Rate which is calculated
by dividing the number of Lost Time
Injuries by the number of hours
worked, multiplied by 100,000.
Climate change is the challenge
of our generation and we have
an ambition to become a net zero
business by 2045.
It is fundamental that we not only
reduce the carbon produced in
our operations and our customers’
operations, but also what becomes
embedded in what we build. Further
detail on the calculation of our GHG
emissions can be found on page 42.
We are committed to being a trusted
community partner and one that
genuinely adds social value. We have
a responsibility to understand the
needs of local people and, where
possible, work with them to make a
lasting difference.
Social contribution is defined as
the sum of charitable/community
donations, employee fundraising,
and the social value resulting from
employee volunteering.
Lost Time Injury Rate (LTIR). Absolute GHG emissions
(Scopes 1, 2 and 3).
Community investment.
Target is to keep LTIR less than 0.15. Net zero GHG emissions by 2045.Annual contribution of 1% of
post-tax profit.
This exceptional performance
was delivered with over 30 million
hours worked by an average daily
workforce of 14,500 across typically
over 170 project sites.
We know that an engaged workforce
works safely and since 2016 we
have increased our engagement
measure and in the same period
halved incidents.
In 2024 absolute emissions reduced
by 1% year-on-year but increased
by 0.3% compared to our 2021
baseline. However, when normalised
by turnover (tCO
2
e/£m) emissions
reduced by 9% compared to our
2021 baseline.
In H1 24 we launched our new social
value plan, which is underpinned
by our comprehensive social value
framework. The social value plan
demonstrates our commitment
and enabling actions to achieve our
goal of improving one million lives
by 2030.
Discover our full GHG disclosure /
pages 42 and 43
Safety
0.11 LTIR
Environmental impact
278,218tCO
2
e
Social contribution
£410k
31Strategic ReportOverview Governance Financial Statements
OurStakeholders
Working together
to achieve our goals
Understanding what is important to our stakeholders
is crucial to delivering shared value.
We have a responsibility to work together
with our customers and partners, our
people, our communities, and our supply
chain to minimise our environmental impact
and to generate positive social value. We
actively listen to our stakeholders and take
action to help address their needs. We look
beyond our local impact and engage with
stakeholders to consider our wider societal
contribution and how this aligns to macro
initiatives such as the United Nations
Sustainable Development Goals.
We work with our stakeholders to
maintain our high standards of business
conduct, particularly with regards to
ethics and human rights issues. We take
a zero-tolerance approach to corruption
and bribery, and our independent
whistleblowing process ensures that we
can listen and react to any concerns
that are raised.
In 2024 we focused our annual mandatory
Code of Conduct training on the updated
Fraud Policy, Gifts and Hospitality Policy
and Process, Competition Law, Conflicts
of Interest, Subsistence, Data Protection
and Whistleblowing.
The Board of Costain is accountable for
Environmental, Social and Governance
(ESG) and sustainability.
The Board recognises that it is essential
that Costain operates in a responsible
manner and that our strategy is aligned
to improving people’s lives, as per
Costain’s purpose.
The Board seeks to engage with each of
our key stakeholder groups to help inform
the strategic decision-making process.
Workforce
Our people are our most valuable
asset. We rely on their skills,
experience, knowledge and diversity
to deliver our purpose to improve
people’s lives. (We share further details
on workforce skills, capabilities and
engagement on pages 82 to 85).
Suppliers
Our suppliers are key to our ability
to deliver pioneering solutions for
our customers. It is important we
understand each other’s cultures
and methods of business.
For our Section 172 Statement, which sets out how the Board takes stakeholder interests
into account when making decisions, see our Governance Report / pages 74 to 77
Our key stakeholder groups
Communities and environment
We value the opportunity to engage with our local communities across all of our
projects. We generate social value as a result of our work in our local communities.
Making a positive contribution to our environment and tackling climate change are
central to our operational practices.
Customers
Understanding our customers’ changing
requirements is fundamental to our
success. We support our customers by
offering them solutions to meet their
evolving needs.
Shareholders
Our shareholders’ views inform our
decision-making and their interests
underpin our commitment to
operating responsibly.
Costain Group PLC | Annual Report and Accounts 2024
32
For our Non-financial and sustainability information statement, which sets out our position on the key non-financial
matters that our stakeholders have deemed important when taking part in our materiality assessment / page 57
People
Employee diversity and inclusion
Community and social value
Employee health and safety
Planet
Carbon
Nature
Resource efficiency
Performance
Ethical corporate behaviour
Climate change resilience
Quality
Costain’s materially important sustainability issues
What matters to our stakeholders
We are committed to identifying and addressing the material sustainability issues that affect
Costain and our stakeholders.
Data-driven materiality analysis
We conduct a quarterly double materiality assessment to help inform Costain’s business planning, our operations, guide our
disclosure, and help us identify stakeholder priorities to enhance our engagement. The process has highlighted changes to our
materially important issues, identifying those increasing in priority, which has allowed us to make informed decisions through
2024 to steer our actions and strategy to align to increasing priorities. Through this smart, data-driven process, we are able to:
focus only on the key issues that matter; monitor changes and be agile when responding to stakeholders; and advance internal
collaboration and leadership knowledge.
The analysis was used to develop an ESG programme, focused on the issues that are materially important to Costain.
33Strategic ReportOverview Governance Financial Statements
Sustainability
Our Sustainability Performance
To thrive in an ever-changing
world, there is a compelling
business case for us to be bolder
in shaping Costain around the
principles of sustainable business.
This will benefit how Costain secures new
business; reduces our operating costs and
risks; attracts, retains and motivates the
brightest and the best; gives us a licence
to operate in the communities where we
operate; helps us anticipate and secure
new technologies, materials and processes
ahead of the market.
We have used an AI-based application
to undertake a ‘double materiality’
assessment, helping to reflect the views
of our stakeholders, wider society and
regulation to highlight the environmental
and social issues that really matter. The
output was used to create (in 2023)
an ESG programme to help us deliver
sustainable business activities in the short
to medium term. Our ESG programme sets
out our detailed goals, KPIs and plans on
issues such as climate change, nature,
water resources, health and safety,
and diversity and inclusion. The ESG
programme brings together all our goals,
targets, KPIs and enablers; showing how
we will create environmental, social and
economic value for all, now and into a more
sustainable future.
Our 2030 goals
• A psychologically safe workplace
with an engaged, thriving and
representative workforce.
• In the period to 2030 our solutions
and social value programmes will
improve more than one million lives.
• Eliminating harm in all we do.
• Net zero carbon (Scope 1 and 2)
by 2035.
• Contributing to nature positive.
• 30% reduction in water use from
operations compared against
a 2023 baseline.
• Our stakeholders rate us as an
ethical company.
• 30% of revenue from ‘green’ projects.
• Right first time.
Reporting progress
against our goals
We recognise reporting progress
against our material sustainability issues
is important to our stakeholders and
demonstrates our integrity (one of
Costain’s core values). Over the past
12 months we have been preparing for
the requirements of the UK Sustainability
Disclosure Standards and will endeavour
to report in line at the earliest opportunity.
We are pleased to report progress against
our annual objectives within this report
and we report in further detail on pages 7
to 37 of our Sustainability Report.
Self-sufficient water system for Eccles
community garden
We created a water run-off system at a community garden in
Eccles, Greater Manchester. This social value initiative is part
of our collaboration with SMP Alliance on National Highways’
upgrade of the M6 between junctions 21a and 26. The system
will make the garden self-sufficient for the watering of plants.
Cleavley Community Forest Garden is an outdoor space
offering educational and horticultural workshops and planting
sessions for local residents and schools. It’s run by Incredible
Education, a social enterprise that specialises in community
health and wellbeing programmes in the region. Working with
local stakeholders, we built on research from the University of
Salford to construct an irrigation system that prioritised the
storage and reusability of rainwater.
The system takes run-off water from the Garden’s workshop
roof to an off-ground water storage unit, which is expected
to capture 20,600 litres of water each year. It forms part
of an educational toolkit for local schoolchildren, covering
sustainability, horticulture, engineering and nutrition. It will
also relieve pressure on external water demands and boost
biodiversity at the community garden.
Discover more on our website / www.costain.com/sustainability
Discover more on our website /
www.costain.com/sustainability
Costain Group PLC | Annual Report and Accounts 202434
2024 objectives Our 2024 progress and performance
2024 2,169
2024 4
2024 18
2023 2,329
2023 4
2023 19
Male
926
4
11
941
4
10
Female
• Eliminating harm in all we do, achieving
an LTIR of 0.15.
• Accredited to Disability Confident level 3
(Achieved – see page 79).
• 10% year-on-year increase in employee
volunteering.
• Continue to ensure 100% of all relevant
designs and delivery contracts have a
carbon baseline and reduction plan.
• Deliver a >6% reduction in our Scope 1
and 2 emissions.
• 100% of relevant contracts working in
accordance with PAS 2080.
• >35% of our spend to be with SMEs.
• >19% of our spend to be with small
businesses and voluntary, community
or social enterprises (VCSEs).
• Have an average Considerate
Constructors Scheme score of >42.
• >£328m spent with small businesses
and VCSEs, equating to 20.6% of our
total spend (2023: 18.4%).
4
• Costain was awarded a Green Economy
Mark by the London Stock Exchange for
delivering green revenue in excess of
50% of turnover.
• Average Considerate Constructors
Scheme score for Costain is 45.5/50.0.
Industry average is 40.7/50.0.
Spend with SMEs
4
41%
2023: 38%
Lost Time Injury Rate (LTIR)
0.11 LTIR
(2023: 0.12)
• Four reportable accidents (2023: 13)
in over 30 million working hours.
Social contribution
1
£410k
2023: £460k.
• 10,100 hours volunteered in our local
communities (2023: 4,100).
• In total £134k was raised and/or
donated to UK charities in 2024.
1 Social contribution is defined as the sum of
charitable/community donations, employee
fundraising, and the social value resulting from
employee volunteering.
Diversity of our workforce
Employees
Board members
Senior management
2024 2023 % change
Scope 1 tCO
2
e (CO
2
equivalent emissions across all legal entities) 4,772 4,876 -2.1%
Scope 2 tCO
2
e (CO
2
equivalent emissions across all legal entities) 888 1,299 -31.6%
Scope 3 tCO
2
e (CO
2
equivalent emissions across all legal entities)
2
272,558 275,181 -1%
Total emissions 278,218 281,355 -1%
% of relevant contracts working in accordance with PAS 2080
3
100% N/A N/A
Water consumption m
3
186,648 Not measured
Major environmental incidents 0 0 0%
Environmental incident frequency rate 0.11 0.18 n/a
2 We account for eight of the 15 Scope 3 categories, with purchased goods and services (PG&S) continuing
to represent our largest hotspot, making up 96% of Scope 3 emissions. For a detailed breakdown of our
emissions including totals of energy consumption as per the Streamlined Energy and Carbon Reporting (SECR)
requirements, see page 43.
3 A ‘relevant project’ is one where Costain is the ‘Principal Contractor’ during either the pre-construction or
construction stage and is over six months long.
People
Planet
Performance
4 Reported SME spend includes joint venture supplier spending where payment has been processed through Costain.
35Strategic ReportOverview Governance Financial Statements
Sustainability continued
The Task Force on Climate-related Financial
Disclosures (TCFD)
We are pleased to make climate-related financial disclosures
consistent with the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations and the requirements of
LR 9.8.6. Our disclosure covers 1 January to 31 December 2024.
We continue to develop our understanding of Costain’s role in mitigating and adapting to climate change,
with a focus on how our business changes can support decarbonisation across the UK.
These disclosures have not been subject to third-party assurance;
however, our greenhouse gas emissions data (page 43) has been
third-party accredited by Achilles per the Toitu Carbon Reduce
scheme and ISO 14064-1 and 3.
Section How we have addressed the disclosure
Governance Costain’s climate-related governance structure is set out and described on page 37. Here we describe the role
of the Board and the Executive Board in managing and assessing climate-related risks and opportunities.
Strategy We set out Costain’s climate-related risks and opportunities on pages 39 and 40 and discuss the scenarios
we have considered in our climate-related scenario analysis on page 38. Details on Costain’s progress in
developing a climate transition plan is given on pages 41 and 42.
Risk management Our approach to climate risk management is fully integrated into how we identify, assess and manage risk
as a whole. We explain Costain’s approach to risk management on page 50 and this section is followed with
information regarding Costain’s principal risks, including climate change (see page 55).
Metrics and targets The metrics used to monitor Costain’s transition to net zero emissions, monitor exposure to physical climate-
related risks and the solutions provided to customers are provided on page 42. Costain’s GHG emissions data
is disclosed on page 43 and a more detailed breakdown provided in our separate Sustainability Report.
We provide a more detailed update on the progress we have made against Costain’s climate change action plan and how we are aligning our
disclosures to the recommendations of the Task Force on Nature-related Financial Disclosures (TNFD) in our separate Sustainability Report
www.costain.com/sustainability/reports-and-downloads
2024 progress
PAS2080:2023update
Costain is a PAS 2080:2023 certified
company and in 2024 was re-
certified by BSI. By aligning ourselves
with PAS 2080 2023, Costain has
a consistent approach to climate
change mitigation through embedding
decarbonisation principles and effective
carbon management.
The PAS 2080:2023 principles
emphasise the collaboration among all
members of the value chain, to build
climate resilience into the start of our
projects and drive decarbonisation
as early as possible in the project’s
life cycle. This collaboration is key to
collectively develop and implement the
PAS 2080 carbon management process.
During 2024 Costain released a suite
of guidance, tools and templates for its
employees on how to comply with the
PAS 2080:2023 principles. This involves
guidance on quantification, reduction
and reporting approaches required in
the tender, design, procurement and
construction stages of projects.
Climateresilience
adaptationcapabilities
In 2024 we have been developing
our climate resilience and adaptation
capability at Costain by focusing on
how we design and how we deliver
our projects.
We have embedded these principles
into our design capability by developing
a climate resilience risk assessment
process, which aligns climate
projections with project requirements,
and maps interdependencies of the
project and its surrounding environment.
On our sites, we are developing
methods to ensure we construct
with climate resilience in mind.
This includes prioritising water
management strategies, minimising
our works footprint, embracing the
natural surroundings, and embedding
cognisance of climate and high-impact
weather events into our plans.
Dataimprovementproject
We developed our Environmental
Construction Data Tracker. The first phase
is focused on carbon, standardising
the collection, quantification and
visualisation of as-built carbon emissions
on our projects. The Tracker enables
our project teams to capture as-built
emissions from across our supply
chain, helping to support project-level
carbon management.
Data is collated monthly for materials
used on site, as well as transportation,
energy, waste and travel associated
with the project’s activities. Project
teams all have access to a project-level
dashboard, where their as-built footprint
is visualised alongside several other
metrics and data to support project-
level carbon management.
The system consolidates data from
across the business and feeds it into a
central database. Data from the tracker
was incorporated into our corporate
GHG disclosure for the first time in
2024, developing our hybrid approach
to future improve the accuracy and
transparency of our data.
Costain Group PLC | Annual Report and Accounts 2024
36
Forum Responsibilities
The Board
The Board has ultimate responsibility for sustainability issues. The Board sets and oversees Costain’s strategic
priorities and monitors the implementation of our strategy, which includes the climate change action plan. The Board
met eight times in 2024, discussing climate-related matters in three meetings. The Board receives a report at each
meeting from the chief people and sustainability officer which provides updates on our sustainability activities.
In October 2024 the Board completed a deep dive of Group risk 20 (a component of Principal Risk 10), failure to
deliver our sustainability targets, particularly Net Zero 2035. In conjunction with the risk deep dive, the Board
considered and approved a revision to Costain’s absolute net zero target, realigning the ambition to 2045 in light of
the scenario analysis presented to them (see pages 41 to 42).
The chief executive officer has accountability for Principal Risk 10 – Climate change resilience.
The Audit and Risk
Committee – reports
to the Board
The Audit and Risk Committee meets four times per year and is responsible for supporting the Board in its oversight
of all risks, including climate change. The Audit and Risk Committee reviews Principal Risk 10 twice a year along with
our other principal risks.
Remuneration
Committee – reports
to the Board
The Remuneration Committee approves the annual incentive plan for the executive directors and senior managers,
which includes a weighting for safety, health and environmental (SHE) performance. The Remuneration Committee
approves the Long-Term Incentive Plan (LTIP) criteria, which includes an ESG weighting (climate change 15%).
The Executive Board –
reports to the Board
The Executive Board is responsible for the management of strategic risks and opportunities and monitoring the
progress of Costain’s ESG programme and climate change action plan, ensuring that the necessary resources are
available. The Executive Board met 10 times in 2024, with climate-related matters discussed in three meetings. The
Executive Board receives a report at each meeting from the chief people and sustainability officer providing updates
on our sustainability activities and the Group SHE director provides a detailed report setting out our projects’
performance against agreed carbon reduction plans and biodiversity plans.
In September 2024 the Executive Board considered the findings from scenario analysis related to Costain’s
transition planning and discussed the risks and opportunities related to the potential transition pathways for Costain
and agreed to make a recommendation to the Board to revise Costain’s absolute net zero target (see pages 41 to 42).
Executive Safety, Health
and Environment (SHE)
Committee – reports to
the Executive Board
The Executive Safety, Health and Environmental (SHE) Committee is responsible for the delivery of Costain’s climate
change action plan and reports progress to the Executive Board. The meeting is structured into two separate parts,
to ensure topics such as climate change, carbon, nature and environmental performance are given appropriate
oversight. The Committee membership includes Costain’s two divisional managing directors, the chief people and
sustainability officer, chief engineer and procurement and supply chain director. The Executive SHE Committee met
nine times in 2024, with climate-related matters discussed at every meeting.
Operational leadership –
reports to the
Executive Board
Operational leadership reports to the Executive Board: risks and opportunities are managed by the divisional
leadership teams, with the managing directors responsible for taking a market-based approach to these matters.
Climate-related governance
Corporate governance is key to our management and Board oversight, ensuring we’re aligned with our values and on track with
our goals. The Board holds responsibility for sustainability related activities, making sure that our policies and strategies are in line
with broader business objectives. Our governance structure below establishes clear accountability and assigns responsibility for
climate- related matters at the appropriate levels. This approach delegates authority to manage risks and opportunities at the appropriate
level and enables local decision-making for operational matters. Those accountable and their responsibilities are central to Costain’s
climate-related governance:
37Strategic ReportOverview Governance Financial Statements
Sustainability continued
Strategy
We are strategically well positioned in our four key UK markets,
where there is commitment to long-term investment in infrastructure:
Transport, Water, Energy, and Defence and Nuclear Energy.
On pages 12 to 17 Costain’s strategy and business model is set
out in detail. We understand the policy, investment and regulation
trends that are reinforcing our strategy in terms of changing
market needs and how climate change is driving this. We believe
that our approach puts us at the forefront of meeting this
opportunity to create truly connected, sustainable infrastructure
for the good of UK communities and to improve people’s lives. We
collaborate with our customers who we have specifically chosen
to partner with us to help shape the future of infrastructure
delivery and asset management.
On pages 39 and 40 we have set out and described the climate-
related opportunities and risks to Costain over the short (0–3
years), medium (3–10) and long term (10 years+).
Since its implementation in 2020, our climate change action plan
has shaped our strategy, reinforcing resilience and will enable us
to achieve a net zero future. We provide a detailed report of our
progress against our ambition in our Sustainability Report.
Scenario analysis: resilience of strategy
To increase our understanding of the transitional and physical risks
Costain faces with climate change, we have worked with trusted
consultants and academic partners to develop quantitative and
qualitative scenario analysis. We have identified the climate-
related risks most material to our future operations.
We considered the drivers most pertinent to the risks identified
(pages 39 and 40) and then stress tested them against
three recognised climate scenarios (below). The risk drivers
considered include:
• Physical – the scenario analysis focused on modelling the
impact of extreme heat and precipitation on Costain’s ability
to be productive in the future and costs of mitigation and/or
remedial works.
• Transitional – we considered how carbon taxation would affect
raw materials pricing.
These scenarios were based on the Network for Greening the
Financial System (NGFS) global climate models to qualitatively
assess the possible implications of climate change on our
business up to 2050.
The scenarios are as follows:
1) Net zero 2050 – This scenario aims to limit warming to 1.5°C
through strict climate policies and innovation in construction
activities. It also targets net zero CO
2
emissions by 2050,
bringing it in line with the 2015 Paris Agreement.
2) Delayed transition – This assumes a ‘disorderly transition’
where annual carbon emissions do not decrease until 2030.
Stringent policies are then required to constrain warming to
below 2°C.
3) Current policies – This scenario models the high climate
impacts associated with a warming of 3°C+, if only current
policies and plans are preserved.
Creating connected and sustainable infrastructure enabling people and the planet to thrive for future
generations is ingrained throughout everything that we do.
We are using the insight gained from this scenario analysis to
influence business planning decisions and in developing our risks
and opportunities (see pages 39 and 40). By communicating these
findings throughout our business, we are increasing visibility of our
climate-related risks, and influencing decision-making.
Throughout 2024 we have worked on the development of
Costain’s climate transition plan, planning for an orderly transition
to net zero through a better understanding of the complex
interdependencies involved. You can find out more about our
progress towards this and the scenario analysis undertaken
to inform Costain’s revised net zero target on pages 41 to 43.
Resilience of Costain’s strategy to climate change
We have identified risks and opportunities (see pages 39 and 40)
that could arise taking into consideration a 2°C or lower scenario.
We believe Costain’s strategy to be resilient to our various
climate risks and we are well placed to capitalise on the market
opportunity presented through our customers’ need to enhance
the climate resilience of their infrastructure. These opportunities
by far outweigh the identified risks, irrespective of which of the
three NGFS scenarios is considered.
We believe that there are significant opportunities to shape and
deliver decarbonised solutions to our customers and we are
investing to ensure our people have the skills and capabilities to
meet this challenge.
Impact on financial statements
We are monitoring our contractual position due to disallowable
costs arising from our transition to net zero and work collaboratively
with our customers and suppliers to manage this risk. These costs
are mainly related to the additional price premium for low carbon
materials and fuels, such as hydrotreated vegetable oil (HVO)
fuel which is not universally an allowable cost with all customers.
However, we do not believe these costs are material.
Going concern and viability
While climate change resilience is one of Costain’s principal
risks, the prospective impact of climate change on the business’s
operating costs are not considered material within the time
frame over which going concern and viability are considered.
Our scenario analysis does not suggest that in the short or
medium term climate change will have a material impact on future
viability assessments.
www.costain.com/our-culture/performance-and-reports/
Costain Group PLC | Annual Report and Accounts 202438
Risks
Risk Description/Impact Response
1. Government tax
on carbon/carbon
pricing mechanism
Media interest, changing public attitudes and the UK’s binding
2050 net zero target has led to greater expectations for
infrastructure companies to provide low carbon solutions.
This change in public sentiment could lead to the government
introducing legislation in the form of a tax to incentivise
decarbonisation.
As Costain uses large volumes of high-intensity carbon
materials such as cement and steel, this could lead to an
increased tax burden and higher operational costs up and
down our value chain.
Costain is working in partnership with customers
and suppliers to accelerate opportunities to reduce
embodied emissions in materials and reduce energy
consumption from construction activities.
Costain’s carbon goals have been validated by the
Science Based Targets Initiative, and following further
detailed scenario analysis (see pages 41 and 42),
Costain has set out its carbon transition plan to meet
net zero emissions across all scopes by 2045.
2. Failure to achieve
net zero targets
The supply of low carbon materials and/or the decarbonisation
of the energy grid has a direct link to Costain’s ability to meet
its net zero targets.
Failure to meet Costain’s net zero targets (see page 55) could
result in reputational damage and/or loss of future business
opportunities which in turn could impact revenue.
Following detailed scenario analysis the Board
approved in October 2024 a revised net zero target
(see page 41).
Costain is focused on providing low carbon design
solutions and developing strategic relationships
with suppliers to ensure it is able to facilitate early
adoption of low carbon materials, plant and other
goods and services.
3. Changes in
customer buying
behaviour
Our customers’ approach to procurement may inhibit or
disincentivise our ambition for low-carbon and sustainable
solutions. A price-centred procurement approach will focus
on sourcing the cheapest materials, potentially at the expense
of higher embodied carbon. This conflicts with Costain’s
sustainable procurement approach, which aims to reduce
embodied carbon in materials purchased.
This risk could be exaggerated due to potential increased
costs related to certified sustainable materials, which in the
short to medium term are likely to be in short supply.
Conversely, some customers may prioritise selecting low-
carbon solutions and only select leading companies.
Costain is working in collaboration with designers,
partners, customers and suppliers to implement
the PAS 2080 carbon principles. Implementing PAS
2080 will help lower whole life project costs, reduce
emissions, and enhance competitiveness in tenders.
By collaborating with our value chain we can reduce
the effect of the cost/ carbon tipping point and
support scaling up of new materials and techniques.
During 2024 Costain updated its carbon management
system, with new requirements in order to comply
with the PAS 2080:2023 principles (see page 36 for
further information).
4. Increase in
disruptions
due to severe
weather events
Intense storm events (through flooding and/or wind ) may
cause damage to project sites causing additional costs and
delays. Damages to assets could lead to write-offs and early
retirement of existing assets.
Increased insurance costs could arise due to more material
damage claims.
Extreme weather can lead to supply chain disruption (longer
lead times, delays on projects, increased costs). The effect
of this would be to increase project costs, which may not be
transferred onto the client.
We are incorporating risk measurement into our
project controls, for example on our M60 project
we are tracking the effects of weather events
within project controls, enabling us to understand
the impact of the events and the cost of the lost
time/days. We use this to strengthen our risk analysis,
improve our SHE assurance and inform future
risk management.
We are also trialling digital tools to predict the
effect of weather events on programmes and better
understand the potential impacts of events.
Climate risks and opportunities
The table below summarises the climate-related risks and opportunities that we have identified in the short, medium and long term.
Costain’s processes for identifying, assessing and managing climate-related risks are consistent with all Group risks (see pages 52 to 55).
Costain has a Climate Change Principal Risk which is underpinned by detailed consideration of both the physical impact of climate
change on Costain’s ability to operate, and the transitional risks related to achieving our net zero objectives. For further details on this
risk and how Costain approaches risk management, please see pages 50 and 51).
Short-term Medium-term Long-term
39Strategic ReportOverview Governance Financial Statements
Risk Description/Impact Response
5. Long-term
effects of climate
change on
working habits
and infrastructure
assets
Hotter, drier summers leading to an increase in heatwave
conditions may require changes to project working practices.
Increased temperatures may cause productivity to decrease,
thereby reducing our revenues. Costain may therefore need
to provide protective equipment to ensure safe working
environments for employees and ensure productivity remains
constant. This would increase project costs.
Rising mean temperatures will also impact the type of materials
we are able to use on projects.
We continue to assess the possible future impact
on productivity from extreme weather events and
work with experts such as the University of Colorado
to analyse climate models and academic research
(see page 38).
To mitigate this risk, we have conducted a climate
resilience review of common construction materials
used on sites. This includes the effects of extreme
weather such as heat, cold, wind and precipitation.
We work proactively with customers to ensure
solutions offer climate change resilience.
Opportunities
Opportunity Description/Impact Response
1. Market
opportunities for
investment in low
carbon solutions
infrastructure
Increased demand for low carbon infrastructure. In order
to meet low carbon and energy efficient standards, clients
will have to replace assets or modify existing assets. This is
likely to create many opportunities, with potential for growth
in Costain’s maintenance capabilities. By driving low carbon
alternatives, we can gain a competitive edge over peers.
Increased opportunity to support infrastructure customers
with the decarbonisation of their assets and to support the
energy transition.
We are investing in our sustainable engineering
capability, upskilling engineers and commercial
colleagues to meet future customer demand.
We have invested in a carbon tracker so we can
better understand our carbon data and target greater
reduction in hotspots.
Where we are in contract, we are working closely
with customers to accurately assess their low carbon
requirements and increase our capacity to deliver low
carbon infrastructure.
2. Market opportunity
for increased asset
resilience
Due to climate change, we are likely to experience an
increase in more severe weather events such as intense
rainfall, floods, and heatwaves. This will create a demand for
infrastructure to be more resilient to changing conditions and
to futureproof existing assets:
• There is high potential in the water sector – the capacity
of sewage systems needs to be increased to deal with
additional strains placed on it by rainfall intensity coupled
with increased demand.
• There is a significant opportunity to enhance the resilience
of the highway network, through increased maintenance
and modification to improve the drainage capacity or
resilience of assets.
• There is also an opportunity to incorporate nature-based
solutions into infrastructure to improve resilience and
provide lower whole life costs.
We continue to build on our expertise in water
treatment and sewage capabilities, with our work
on AMP8. This will aid Costain in building strategic
business partnerships with water companies, further
increasing our pipeline of work.
We continue to build on our work in the roads sector,
ensuring that we build our expertise in the resilience
of the road network.
We work closely with our supply chain and clients
to deliver solutions to asset resilience issues.
We are collaborating with partners who have
experience of delivering nature based solutions
and building our skills and knowledge within our
design teams.
3. Increase resource
efficiency
By enhancing resource efficiency through a circular
economy approach, we can minimise our greenhouse gas
(GHG) emissions, reduce material use and waste, and lower
infrastructure delivery costs. This will, in turn, decrease waste
disposal expenses and reduce the overall cost of projects.
Greater energy and materials efficiency is key to Costain’s
net zero target and those of our customers.
Whole life cost efficiencies can be realised through the use
of renewable/low carbon energy sources on our projects
– both in terms of our own operations and in what we are
constructing for our clients in terms of operational energy use.
Our ‘production initiative’ focuses on ensuring we
deliver efficient solutions through design and delivery
and drive down the associated GHG emissions.
We are rolling out a carbon tracker (see page
36) to track resource use across our projects,
highlighting areas for improvement in comparison
to industry standards.
Our sustainability procurement guidance and
materials mandate encourages the value chain to seek
alternatives to high-carbon materials and optimise
construction process efficiency.
We are actively monitoring water consumption and
setting reduction targets following the completion
of a water usage baseline in 2023.
Sustainability continued
Short-term Medium-term Long-term
Costain Group PLC | Annual Report and Accounts 202440
Developing Our Climate Transition Plan
In 2024, we commenced the development of our climate transition
plan, building on our climate change action plan and the progress
we have made to date. We plan to disclose our climate transition
plan in 2025 and have followed the Transition Plan Taskforce
Disclosure Framework to ensure we cover all relevant areas
such as strategy, implementation, governance, engagement and
targets. When we disclose our plan we will ensure that it reflects
any changes resulting from the incorporation of the Transition
Plan Taskforce into the IFRS International Sustainability Standards.
“ Our ambition is to decarbonise Costain,
achieving net zero for all our emissions
and driving the decarbonisation and
climate resilience of UK infrastructure,
while positively contributing to
nature’s recovery.”
Alex Vaughan
Chief Executive Officer
Our decarbonisation vision
In 2024, we had our science-based targets validated by the
Science Based Target initiative (SBTi). These targets see us
reaching net zero across everything we do (Scopes 1, 2 and 3) by
2050. The SBTi is an important, globally-recognised measure for
standardising and setting ambitious emissions reduction targets in
line with the latest climate science. It’s a key requirement for our
customers across all our sectors.
We understand the challenge in reaching net zero for our supply
chain’s products and activities (Scope 3), specifically with some
materials – concrete, steel, asphalt and aggregates – where
the technology or processes needed to decarbonise by 2035
are not available at scale. For this reason, the Board approved
management’s recommendation to realign our net zero target for
our Scope 3 emissions to 2045. There are some elements of our
supply chain where, through collaboration, we can move faster,
and for these, we are aiming to reach net zero by 2035.
We recognise the climate and nature emergencies and the urgent
need to decarbonise more quickly and aim to stay as close to
our original 2035 goal as possible. We will not lose momentum,
and our commitment and ambition to reduce our emissions even
faster remain.
We’re committed to developing and implementing low-carbon
solutions, and as a business, we are investing in this space through
initiatives such as Future Roads and low carbon concrete research
groups. We have made good progress in decarbonising traditional
construction techniques, enhancing design standards, improving
data quality and supporting our supply chain with their ambitions.
We are proud members of The Climate Pledge, Supply Chain
Sustainability School and have a leading voice in driving change
and accelerating the industry’s response to Scope 3 emissions.
We are alive to the urgent need to decarbonise the construction
industry. We continue to play a leading role in delivering innovative
and sustainable infrastructure solutions to accelerate the UK’s
decarbonisation, improve people’s lives and safeguard the
planet’s future.
Using scenario analysis to test our transition
to net zero
During 2024, we reviewed our progress towards net zero to date,
our future net zero projection, the industry’s progress towards
net zero (specifically for materials), our science-based targets and
undertook targeted scenario analysis. The evidence we gathered
and tested both internally and with selected strategic suppliers
supports the update to our net zero trajectory and reinforces
our dedication to achieving net zero and addressing the climate
emergency.
We analysed three scenarios, applying the assumption that
Costain’s business model and service offering remains as it is
in 2024 (see pages 16 and 17):
1) The downside case, which assumes a delayed transition (or
a ‘disorderly transition’) where market, economic, and policy
drivers mean achieving net zero by 2050 is unlikely
2) The most likely case (or an orderly transition) that limits
warming to 2°C through stringent climate policies and
innovation, reaching net zero CO
2
emissions around 2050. This
scenario is compatible with the long-term temperature goal of
the Paris Agreement.
3) The upside case, which assumes that market, economic and
policy drivers result in widespread industrial decarbonisation,
particularly of the energy grid and technologies such as
carbon capture and storage, are effective and scalable. This
scenario saw Costain achieve net zero by 2045.
Our net zero targets
In October 2024, the Board undertook a deep dive into the risk
of Costain not meeting its net zero targets and considered a
proposal to revise Costain’s net zero target (net zero by 2035
across all scopes). The Board was convinced by the evidence
presented and approved the following targets:
• Achieve net zero for Scope 1 and 2 emissions by 2035.
• Achieve net zero for Scope 3 emissions by 2045.
In line with the update and our improved understanding of our
long-term net zero plan, we will be resubmitting our science-
based targets in due course to reflect our updated position.
41Strategic ReportOverview Governance Financial Statements
Metrics
The table below sets out the targets and associated metrics used to assess and manage Costain’s relevant climate-related risks and
opportunities. These metrics are focused towards carbon reduction and the management of water pollution events (as per the risks
and opportunities disclosed on pages 39 and 40).
Targets Metrics 2024 2023
Deliver a >6% year-on-year
reduction in our Scope 1 and 2
emissions
Greenhouse gas emissions Scope 1 and 2. This metric is associated with
our Sustainability-Linked Loan. -8% -16%
% of purchased fuel is HVO.
68% 89%
Deliver a >6% year-on-year
reduction in our absolute emissions
Greenhouse gas emissions Scope 1 and 2. This metric is associated with
our near-term Science-based Target. -1% -6%
100% of relevant contracts working
in accordance with PAS 2080
% of contracts compliant with 2023 low-carbon materials mandate.
98% 67%
% relevant designs and delivery contracts have a carbon baseline
and reduction plan.
100% 100%
50% reduction in the water pollution
incident rate by the end of 2027
Water pollution environmental incident rate (no. of water pollution incidents
normalised by total hours worked) compared to 2024 baseline. 0.06 0.11
Employees understand their role
in helping Costain to meet net zero
Positive responses to Costain’s annual employee engagement survey
question, ‘do you understand your role in helping Costain to meet net zero?’ 69% 68%
Greenhouse gas emissions
Our emissions data is calculated in line with the GHG Protocol. Costain applies an equity share approach to our GHG emissions boundary
and where we operate in a joint venture we account for Costain’s proportionate equity percentage of GHG emissions. Our data is third-
party accredited by Achilles per the Toitu Carbon Reduce scheme and ISO 14064-1 and 3. All of our emissions are incurred in the UK.
Sustainability continued
Costain Group PLC | Annual Report and Accounts 202442
In 2025 we will disclose our transition plan, which will be
embedded into our corporate strategy and sets out our ambition
to address the climate emergency. Our transition plan will provide
transparency as to how we will achieve our decarbonisation goals.
The implementation of our transition plan
is underpinned by robust governance,
risk management and reporting to ensure
successful delivery and accountability.
We will embed our transition plan into our
financial and business planning to ensure
full organisational implementation. This
will become part of Costain’s sustainable
culture, linking to our values of integrity and
environmental and social responsibility.
We have created a detailed action plan
covering our business functions and projects.
This plan sets out the actions we will take to
decarbonise our internal operations and value
chain, covering Scope 1, 2 and 3 emissions.
We have identified climate resilience-associated
risks and opportunities (see pages 39 and 40) which
inform our plan and will enhance our resilience
to risks and provide opportunities that arise from
climate change.
We will use our position and influence to shape
an infrastructure eco-system-wide transition.
Our collaborative approach will accelerate emission
reduction across our value chain to develop and
implement low-carbon solutions.
1
Our approach
to developing
Costain’s climate
transition plan
23
Responding to
our climate-
related risks and
opportunities
Contributing to
an industry-wide
transition
Decarbonising
our organisation
*Restatement of data
We have restated GHG data from 2021, 2022 and 2023 (see below)
in accordance with our accounting and reporting principles to
ensure relevance, completeness, transparency and accuracy.
The revised numbers are a result of an updated methodology
approach within our spend-based SIC allocation, an update to the
DEFRA consumption-based emission inventory kgCO
2
e/£ carbon
factors and historical updates to exclude VAT from our spend
ledger calculations, previously included in error. These changes
exceeded the 5% threshold and formed part of a 2024 review of
Costain’s historical emissions.
Emissions intensity (Gross tCO
2
e divided by turnover)
Metric tonnes of CO
2
e/£m
2024 2023 2022 2021
Scope 1 3.81 3.66 4.52 10.14
Scope 2 0.71 0.97 0.67 0.91
Scope 3 217.87 206.59 220.44 232.27
Total 222.38 208.87 225.64 243.31
Scope 1 (All direct emissions from the activities under our control)
Metric tonnes of CO
2
e/year
2024 2023 2022 2021
Total 4,772 4,876 6,426 11,561
kWh 49,688,260 61,422,961 62,309,746 48,040,659
Scope 2 (Indirect emissions from our purchased and used electricity)
Energy/ metric tonnes of CO
2
e/year
2024 2023 2022 2021
Metric tonnes of CO
2
e/year 888 1,299 958 1,032
kWh 3,368,323 5,542,724 4,663,809 4,787,774
Location-based tCO
2
e 888 1,299 958 1,302
Market-based tCO
2
e 193 187 56 1,697
Scope 3
Metric tonnes of CO
2
e/year
Emission category 2024 2023* 2022* 2021*
Purchased goods and services 262,955 264,337 302,000 253,709
Capital goods 93 15 33 21
Fuel and energy-related activities 3,188 3,275 4,760 5,148
Upstream transportation and distribution 4,350 4,668 3,259 3,099
Waste generated in operations 566 325 952 1,156
Business travel 691 1,930 1,687 1,151
Employee commuting 620 579 565 503
Upstream leased assets 95 52 80 92
Total 272,558 275,181* 313,337* 264,879*
Total emissions
Metric tonnes of CO
2
e/year
2024 2023* 2022* 2021*
Total 278,218 281,355 320,722 277,473
Our performance
In 2024 absolute emissions reduced by 1% year-on-year but
increased by 0.3% compared to our 2021 baseline. However, when
normalised by turnover (tCO
2
e/£m) emissions reduced by 9%
compared to our 2021 baseline.
Costain’s Scope 1 emissions reduced by 2% year-on-year and
by 59% compared to the 2021 baseline year. This reduction has
been driven through changes in construction activity, continued
high use of hydrotreated vegetable oil (HVO) replacing diesel and
further progress in transitioning Costain’s company car fleet to EV.
Scope 2 emissions reduced by 32% year on year and by 14%
compared to the 2021 baseline, driven by changes to the nature
of construction activity in the year (as with Scope 1 emissions).
Scope 3 remains our largest emission source; despite a 1%
reduction compared to 2023 we have seen an increase compared
to the 2021 base year of 3%.
We account for eight of the 15 scope 3 categories, with purchased
goods and services (PG&S) continuing to represent our largest
hotspot, making up 96% of Scope 3 emissions. Subcontractor
activities, concrete and steel represent a significant portion of
PG&S. As such our focus remains on collaborating with our supply
chain, setting up low carbon contracts, incorporating more low
carbon alternatives and actively promoting a ‘use less’ philosophy
across all of our activities.
We provide further detail on our emissions and energy consumption in our sustainability databook /
www.costain.com/sustainability/reports-and-downloads/
43Strategic ReportOverview Governance Financial Statements
Sustainability continued
Gender and Ethnicity Pay Gap
Our data-led approach to inclusion uses both quantitative and
qualitative data to inform action. Our new HR system continues to
improve data accessibility and reporting and we actively create
spaces for employee feedback through our employee networks,
engagement survey and listening circles.
Gender pay gap
Despite making progress in recent years our 2024 median gender
pay gap increased by 2.2% from 2023 to 26.7% (2023: 24.4%).
This is the first increase we have seen in our gender pay gap
since 2021.
We believe this increase is related to the increase in women
joining the business in the lower quartile, notably through our
apprentice and graduate schemes, resulting in an increase in the
proportion of women overall and in the lower pay quartile.
We were delighted to be recognised as a Times Top 50 Employer
for Gender Equality for 2024 and to be invited by Business
in the Community to share our progress and learnings.
Key considerations for achieving this accolade include the
success of Empower, our programme to tackle barriers to
women’s progression, improving transparency of reward
and career opportunities through our job architecture and
career-path framework and our support for women with
intersectional identities.
Equality, equity, diversity and inclusion are central to how we operate as a business. We are committed to
maintaining a psychologically safe workplace where all employees are empowered to participate, contribute
and challenge the status quo.
In 2024, we ran the second cohort of our Empower programme
and, since the pilot, 24 women have benefitted from the
programme. We have since seen three attendees progress
onto our Emerging Leaders programme, and five attendees
make a lateral or upwards career move. We encourage diverse
participation in our development programmes and actively seek
to address imposter syndrome which may prevent marginalised
groups from applying.
Ethnicity pay gap
We’ve seen a 3.9% increase in the median pay gap for Asian
colleagues and we believe this increase is due to a reduction in
Asian representation in the upper pay quartile by 1.42%. However,
we are reporting decreases in our median ethnicity pay gaps
by 2.71% for Black colleagues and 2.43% for Mixed Heritage and
Other Heritage ethnicity colleagues. This is in part driven by a 1.1%
increase in the proportion of Black colleagues in the upper middle
pay quartile since 2023.
In 2024 we commissioned the second of our listening circles with
employees from different ethnic backgrounds to understand the
different experiences in career progression, development, pay
and reward. Our listening circle programme has been central to
understanding some of the reasons behind our differing ethnicity
pay gaps and the development of our 2025 Inclusion Plan.
Costain’s integrated gender and ethnicity pay gap report can be found on our website /
www.costain.com/our-culture/equality-diversity-and-inclusion
Delegates of the 2024 Empower programme
Costain Group PLC | Annual Report and Accounts 202444
Voluntary reporting on disability
We were delighted to become an accredited Disability Confident
Leader, achieving the objectives we set ourselves in our 2021
Inclusion Strategy. This is the highest level of Government
accreditation for employers who are actively working to employ
and retain disabled talent. To become a Disability Confident
Leader requires a third-party validation of evidence, which was
carried out by the Business Disability Forum.
The Business Disability Forum commended Costain for our
exemplary dedication to disability inclusion by forging strong
relationships with disability employment organisations, embedding
inclusivity into our recruitment practices and prioritising
accessibility in our digital presence.
As part of our accreditation as a Disability Confident Leader,
we are committed to the Government voluntary reporting
framework for disability. Our disability reporting can be found
in our Sustainability Report on pages 13 and 14 and in our
sustainability databook.
www.costain.com/our-culture/performance-and-reports/
Ethnicity and gender pay gap statistics
Ethnicity pay gap 2024 All White All Asian All Black
All Other
ethnicities
Median
n/a 17.8% 17.3% 14.5%
Mean
n/a 16.7% 24.8% 17.2%
Gender pay gap 2023 2024 Change
Median
24.4% 26.7% 2.2%
Mean
15.8% 21.1% 5.3%
Employee population 31 December 2024 Total Male Female Black Asian
All Other
ethnicities
Unknown
ethnicity
Number of employees
3,095 2,169 926 167 276 73 152
Percentage
100% 70% 30% 5.4% 8.9% 2.4% 4.9%
Colleagues promoting Costain’s involvement in Women in Defence
45Strategic ReportOverview Governance Financial Statements
A good financial
performance with a strong
increase in our forward
work position.
“ We continued to increase our
operating profit and margin
for the fourth year and have
maintained a healthy net cash
position.”
Helen Willis
Chief Financial Officer
ChiefFinancialOfficer’sReview
Costain Group PLC | Annual Report and Accounts 202446
2024 £31.1m
2023 £26.8m
2022 £34.9m
2024 £1,251.1m
2023 £1,332.0m
2022 £1,421.4m
The quality and balance of our forward work position across our two divisions,
together with continued strong market investment, gives us increasing
visibility on future revenue and margin.
1 See notes 2 to 4 of the financial statements for adjusted metric details
and definitions, and reconciliation to reported metrics.
Revenue
£1,251.1m
Operating profit
£31.1m
Operating profit margin
2.5%
Adjustments to reported items
We incurred £5.4m (FY23: £6.2m) in respect of this final year
of our Transformation programme, and £nil (FY23: £7.1m) of
restructuring costs. The restructuring costs in FY23 included
£5.3m related to an impairment of an intangible asset following
the repositioning of digital services. In H2 24 we settled a claim
for fire safety compliance related to the design and build of
a development which was completed in 2001, and we have
identified one other fire safety liability for a building completed
in 2013 with a provision created in respect of this.
Administrative expenses
The Group incurred administrative expenses of £72.2m in FY24,
a decrease of £5.8m on the same period last year (FY23: £78.0m).
£4.0m of the decrease has been driven by benefits from our
Transformation programme, net of cost and wage inflation and
incremental investment. £1.3m of the decrease relates to lower
adjusting items as discussed above.
Net financial income
Net finance income amounted to £5.4m (FY23: £4.1m). The interest
payable on bank overdrafts, loans and other similar charges was
£1.4m (FY23: £2.3m) and the interest income from bank deposits
amounted to £6.7m (FY23: £4.8m). In addition, the net finance
income includes the interest income on the net assets of the
pension scheme of £2.6m (FY23: £3.2m), the interest expense on
lease liabilities of £2.5m (FY23: £1.5m) under IFRS 16, and other
interest expense of £nil (FY23: £0.1m).
Cash flow
The Group generated adjusted free cash flow of £27.1m in FY24
(FY23: £72.0m), lower than last year largely due to the timing of
year-end working capital and higher tax and capital expenditure
payments as we invest in new systems, partially offset by lower
pension deficit contributions.
The Group had a positive net cash balance, excluding cash with
restrictions, of £158.5m as of 31 December 2024 (FY23: £164.4m;
H1 24: £166.0m) comprising Costain cash balances of £95.8m
(FY23: £105.2m; H1 24: £96.2m), cash held by joint operations
of £62.7m (FY23: £59.2m; H1 24: £69.8m) and borrowings of £nil
(FY23: £nil; H1 24: £nil). During FY24, the Group’s average month-
end net cash balance was £169.8m (FY23: £141.4m; H1 24: £173.9m)
and the Group’s average week-end net cash balance was £164.3m
(FY23: £141.0m; H1 24: £168.2m). Utilisation of the total bonding
facilities as of 31 December 2024 was £65.3m (FY23: £69.9m,
H1 24: £65.3m).
2024 2.5%
2023 2.0%
2022 2.5%
Transportation Natural Resources Group
2024 2023 Change 2024 2023 Change 2024 2023 Change
Revenue £m
Reported 845.9
943.1 -10.3%
405.3
388.9 4.2%
1251.1
1,332.0 -6.1%
Operating profit £m
Adjusted
1
29.9
28.0 6.9%
23.8
21.8 9.2%
43.1
40.1 7.5%
Adjusting items
1
–
(7.1) –
–
(0.1)
(12.0)
(13.3)
Reported 29.9
20.9 43.1%
23.8
21.7 9.7%
31.1
26.8 16.0%
47Strategic ReportOverview Governance Financial Statements
ChiefFinancialOfficer’sReview continued
Capital allocation
Costain continues to perform well against its strategic targets and
expects to deliver long-term sustainable value for its stakeholders.
The Group’s capital allocation priorities are: investing for growth,
progressive dividend, selective M&A, and returning surplus capital.
• Investing for growth. The Group’s Transformation programme,
which simplifies and increases efficiencies within the business,
was completed during FY24. In FY24, we invested around £5.0m
in upgrading our HR system to increase efficiencies within the
business and have also invested in office moves. Costain will
continue to make disciplined investment in the coming years in
key areas such as systems and digitisation that will accelerate
its business improvement.
• Progressive dividend. The Board recognises the importance
of dividends for shareholders. Dividend payments take into
account the cash flow generated in the period, and the
potential impact of the “dividend parity” arrangement relating
to the defined benefit pension scheme, which continues until
31 March 2027. The Board has a target dividend cover of around
three times adjusted earnings, which provides headroom for
further dividend growth to achieve the target cover level as and
when the dividend parity arrangement is no longer in place.
• Dividend payments. Payments were resumed in FY23 with a
full year dividend of 1.2p per share for the year, in line with the
pension payments level under the dividend parity arrangements.
The Board has proposed a final dividend of 2.0p per share
(H2 23: 0.8p) for the six months ended 31 December 2024, an
increase of 150% for the final FY24 dividend, and an increase of
100% for the year.
• Selective M&A. The Board retains optionality to pursue strategic
investments in technology, skills and capabilities to enhance our
ability to support customers.
• Returning surplus capital. After ensuring a strong balance
sheet and cash position, identified surplus capital will be
returned to shareholders through share buybacks or special
dividends. The current outlook and trading across Costain’s
markets is encouraging and is supportive of our strategy. In
August 2024, we announced having reviewed the Group’s
strong cash performance and ongoing capital requirements,
an on-market share buyback programme for up to a maximum
aggregate consideration of £10m (excluding stamp duty and
expenses). This programme was completed in November
2023 and purchased 9,718,950 Ordinary Shares in aggregate
for cancellation.
Tax
The Group has a tax charge of £5.9m (FY23: £8.8m) giving an
effective tax rate of 16.2% (FY23: 28.5%). The adjusted effective
tax rate
1
was 18.3% (FY23: 24.2%). The lower than expected tax
rate was due to the ongoing tax relief on the exercise of share-
based payments, together with a revised treatment of the 2023
impairment. We expect the effective tax rate in 2025 to remain
marginally below the blended statutory tax rate of 25%.
Pension review
On 30 June 2023, we announced that agreement had been
reached with the Trustee of the Group’s defined benefit pension
scheme on the 31 March 2022 triennial actuarial funding valuation
and ongoing contributions to the Scheme. The contribution
plan from the Group to the Costain Pension Scheme runs from
1 July 2023 to 31 March 2027 and is for a payment of £3.3m per
year, payable in monthly instalments, scheduled to increase in
line with inflation (CPI) each 1 April.
Adjusted free cash flow reconciliation
£m FY24 FY23
Cash flow from operations 41.7 69.6
Add back adjusting items 8.6 9.2
Add back pension deficit contributions 2.0 8.1
Less cash flows on cash and cash equivalents – with restrictions (14.0) (14.1)
Less taxation (2.2) (0.7)
Less capital expenditure (9.0) (0.1)
Free cash flow 27.1 72.0
Net cash reconciliation
£m FY24 FY23
Cash and cash equivalents at the beginning of period 164.4 123.8
Net cash flow (5.9) 40.6
Cash and cash equivalents at the end of period 158.5 164.4
Net cash 158.5 164.4
Costain Group PLC | Annual Report and Accounts 202448
An assessment of the Scheme funding position was carried out on
31 March 2024 and, as the funding level (on a Technical Provisions
basis) was more than 101%, contributions stopped from 1 July 2024
to 30 June 2025.
In addition to contributions being stopped, as the funding
level is above 101%, ‘dividend parity’ was suspended for a year.
Under the dividend parity arrangement, an additional matching
contribution (the excess of the total dividend above the Scheme
contribution) is paid to the Costain Pension Scheme when the
total of the interim and final dividends (or other return of capital
such as a buyback) is greater than the contributions paid into
the Scheme in the previous Scheme financial year, which runs
from 1 April to 31 March.
Consultancy
During FY24 we had 12% of revenue deriving from our three areas
of consultancy services: delivery partner, engineering & design
services, and advisory & digital solutions, with the majority of
revenue within consultancy arising from delivery partnerships.
Consultancy services are included within our two divisional
revenue streams and have higher than average Group adjusted
operating margins.
1
Pensions
Cash contributions made to the scheme during FY24 amounted to
£2.0m (FY23: £8.1m) and the charge to operating profit in respect
of the administration cost of the UK Pension Scheme in FY24 was
£0.2m (FY23: £0.2m).
As at 31 December 2024, the Group’s pension scheme was in
surplus in accordance with IAS 19 at £54.9m (FY23: £53.5m
surplus; H1 24: £55.1m surplus). The movement in the IAS 19
valuation, being a slight increase in surplus from 31 December
2023 to 31 December 2024, was due to a change in discount
rate assumptions resulting in a decrease in benefit obligations.
Transformation programme
Our Transformation programme, which simplifies and increases
efficiencies within the business was largely completed during
FY24, having delivered adjusted operating profit
1
and adjusted
operating margin
1
uplift during the year, as well as enabling
disciplined investment in business improvement activities.
Helen Willis
Chief Financial Officer
10 March 2025
1 See notes 2 to 4 of the financial statements for adjusted metric
details and definitions, and reconciliation to reported metrics.
49Strategic ReportOverview Governance Financial Statements
RiskManagement
Our risk management process
The timely and thorough evaluation of risk is central to our business decision-making, and our approach is designed to ensure risks
of all categories are identified, fully understood, and actively managed to protect our business, our people and the value we deliver
for our customers.
Our process applies at all levels, from individual project risks to our Group-level principal risks. This approach ensures that risks are
considered throughout the lifecycle and that learning from our operational activities supports continuous improvement.
Initiate
Designing and setting up the arrangements required – in accordance with our risk framework –
to enable effective management of risk for a specific activity, for example a new contract.
Close
Capturing key risk management lessons at the end of an activity, ensuring
that any remaining risks have been addressed and closed or transferred.
Identify
Identifying and clearly defining the potential threats
and opportunities which could impact the activity and/
or our ability to meet objectives.
Assess
Using best judgement, experience, industry norms
and lessons learned to assess the likelihood and
potential consequences of the identified risks,
considering any existing control measures.
Plan
Developing and planning response actions with specific
owners and timescales, for example to avoid or reduce
a risk or to help enhance or realise an opportunity.
Implement
Carrying out response actions, monitoring risk
trends and updating the plan and risk assessment.
Managing risk through the contract lifecycle
Risk management is central to the work we deliver for our customers, and in particular our construction project activities, where our
teams manage a broad range of risks including those related to design maturity, approvals and consents, existing asset condition
and the performance of third parties. Our lifecycle governance and risk management arrangements aim to ensure that we identify
and explore potential risks early, make bid decisions based on our risk appetite, set our contracts up for success, and deliver our
commitments to our customers.
WorkWinning
Our work winning governance includes
early screening to identify key areas
of risk, and to ensure that we pursue
opportunities which align with our risk
appetite. This approach also ensures that
higher-risk activities and contract types
receive enhanced assurance so that risks
are properly understood, and mitigation
strategies are robust. Risk analysis is
used to ensure our pricing and delivery
plans recognise the risks we’re taking
on so that we have confidence in the
commitments we make to customers.
Delivery
Management of risk (including SHE,
design, technical, supplier and third-
party risks) is a central part of how
we deliver our projects, with ongoing
monitoring of risk response and
changes in risk profile, integrated with
other project controls activities. Risk-
based assurance of our contracts is
performed by our Internal Audit and
2nd line of defence functional teams,
providing an independent view of risk
status and ensuring learning and good
practice is shared across our sectors.
Close
When a project is closed,
our teams ensure that
measures are in place
to manage any residual
risks, and lessons and
performance data are
captured for use in
planning future projects.
Costain Group PLC | Annual Report and Accounts 2024
50
Enhancing risk management capability
During 2024, we increased our Risk and Assurance team’s capacity to support work winning and in-flight contracts in designing fit
for purpose risk management arrangements, evaluating risks and conducting specialist risk modelling. This has helped to ensure that
risks are being considered early in the contract lifecycle, key skills and resources are built into plans from the outset, and our in-flight
contracts continue to meet required standards.
Looking ahead, our key priorities include embedding updated processes across our bids and contracts, enabled by new risk management
systems to simplify data capture, review and reporting. We will also continue to build risk awareness and embed improvements through
dedicated training programmes and our existing risk community of practice.
Risk appetite and attitude
The Group’s risk appetite is aligned with our strategy, ensuring we continue to deliver predictable performance and pursue growth in key
markets. The Board’s attitude to key categories of risk is set out in the table below. This is underpinned by clearly defined red lines and
risk factors, which are used to evaluate risk through our contract lifecycle governance, ensuring that decisions are made in accordance
with our risk appetite.
Risk category Appetite Attitude statement
Safety, health
and environment
Zero We have no tolerance for harm to our people or partners, and will continually seek to reduce
these risks and avoid any detrimental impact on the environment.
Markets, customers
and partners
Open We are willing to consider a range of potential markets to achieve success in line with our
strategy. We work with customers with long-term investment plans with whom we can build
strategic relationships and secure repeat orders. We will partner with organisations which
supplement our capability with new skills and share our values.
Contract Cautious While our contracts contain significant risks, we will ensure these risks are well understood,
provisioned for and manageable. We will only accept contracts where there is high
confidence in achieving the target margin.
Technical Cautious We are prepared to accept performance and integration risk provided additional technical
assurance is implemented to ensure this is effectively managed. Our projects are delivered in
accordance with nationally recognised codes and technical standards.
Investment Cautious We will invest in developing solutions or building capability where there is a clear addressable
market demand aligned with our business plan.
Information security Minimal We will protect our systems, our data and our customers’ data to ensure we minimise the risk
of disruption to operations and prevent uncontrolled access to information.
Governance
The Board is responsible for defining risk appetite and determining the nature and extent of the risks the Group is willing to take to
achieve its long-term strategic objectives. On behalf of the Board, the Audit and Risk Committee reviews the effectiveness of the Group’s
risk management and internal control systems every year. The process for doing this is set out in the Audit and Risk Committee Report
on pages 86 to 90.
To undertake a robust assessment of the risks which could threaten the business objectives, performance, sustainability, solvency or
liquidity of Costain, the Board undertakes reviews of our principal risks and mitigation plans during the year to ensure they are well
understood and actively managed to reduce the potential impact. The Board oversees risk deep dives and receives presentations on
these from the Executive Board risk owner.
51Strategic ReportOverview Governance Financial Statements
RiskManagement continued
Principal risks
All principal risks are integrated with our strategic priorities. A formal biannual review of risks by the Board is aligned to half-year
and year-end reporting. Each principal risk is owned by a member of the Executive Board, and discussions are held with risk owners
throughout the year to ensure each risk remains up to date and that control effectiveness and progress on mitigation actions are
reviewed. The detailed assessment for each risk reflects changes to contributing factors and in the external risk landscape, and plans
for 2025 include updates to reflect a number of identified emerging risks.
The table below sets out the principal risks faced by the Group, the link to our strategic priorities, changes in the risk during 2024
(where applicable), along with relevant controls and mitigations.
Risk Description and impact Key controls and mitigations Strategic Link
Safety,
health and
environment
We operate in natural, complex and hazardous
environments. Failure to manage the inherent
risk and hazards could result in illness, injury
or loss of life. Failure to manage this risk could
also affect our reputation and result in loss of
business and financial penalties.
While some of our operational activities
involve significant hazards, we continue
to strive to reduce these risks and prevent
any potential for harm to our people or to
third parties.
Risk trend: Neutral
Early identification of potential environmental
risks during work winning is helping to ensure
we incorporate required controls into delivery
plans. Growth in key sectors will require the
consistent application of our existing, robust
health and safety controls with new teams
and supply chain partners.
• Safety, health and environment (SHE) policy, procedures
and guidance combined with monitoring and assurance.
• The Costain behavioural safety programme.
• Mandated accident and near miss reporting and embedding
of lessons learned.
• SHE assurance review process aligned with the learning
organisation model used throughout delivery and during
bid development to ensure key risks are identified and
appropriate mitigation measures are in place.
• Full consideration of environmental aspects earlier in the
work winning process covering: technical design review
and approvals, updated during mobilisation and monthly
operational review.
• Reporting of environmental incidents and near misses to
ensure lessons learned.
• Identification of measures to build upon and further improve
environment behaviours.
Securing
work and
responding
to changes
in customer
spending
plans
Our future growth and profitability is
dependent on our ability to secure new
work in our competitive marketplace. To
be successful we need to maintain strong
customer relationships and broaden our
service offering by delivering innovative
solutions across complex delivery, digital and
consulting activities. Unforeseen changes to
our core customers’ investment priorities and
spending plans could have a direct impact on
both live contracts and our future pipeline.
Risk trend: Neutral
Significant success in securing new work
during 2024, combined with progress in
diversifying our order book have helped to
increase our resilience to external changes
and ongoing geopolitical conditions.
• Directors’ quarterly progress review of Group and divisional
business plan, budget and objectives.
• Integrate market intelligence, data analysis, reviews and
bid learning to improve and better target work-winning
activities.
• Continual review and update of customer pursuit/account
plans based upon latest market intelligence.
• Implement improvements to work-winning process
including budgeting, opportunity prioritisation and clarity on
deliverables for gate approval.
• As part of the annual strategy review process, changes
in markets and customer landscape are analysed,
particularly in growth and fast-changing customers and
markets. Strategy leads embedded within both divisions
and Group to drive this analysis and ensure continuous
horizon scanning, managing changes to strategy and
business plan, along with emergent risks and opportunities
to Costain and any threats (e.g. competition, customer
organisation change).
• Business development teams at sector and key account
level maintaining good customer and stakeholder
relationships at all levels.
• Customer zipper (stakeholder relationship map) plans
in place to shape relationships with government, local
authorities and trade bodies from Board downwards.
• Strengthening our customer mix and exploring potential
new market areas to increase resilience to changes in
specific areas.
Link to strategic priority
Performance
PlanetPeople
Costain Group PLC | Annual Report and Accounts 202452
Risk Description and impact Key controls and mitigations Strategic Link
Managing
our contracts
and economic
factors
The contractual environment is becoming
more complex with significant pricing
competition while customers seek to transfer
more risk to contracting parties. Onerous
contract terms and conditions can result
in exposure to potential financial losses,
legal penalties and reputational damage. In
addition, changes in the cost and availability
of key materials, plant and fuels, along with
other factors including exchange rates, trade
arrangements and regulations can impact our
delivery and financial performance.
Risk trend: Neutral
Measures introduced early in 2024 to
strengthen protection in our contracts
from external factors such as inflation have
reduced our exposure to this risk (reported as
‘increasing’ in 2023).
• Commercial review process which examines in depth the
performance of all contracts to assess progress in achieving
our strategic objectives.
• Early risk profiling of opportunities to ensure key contract
risks are identified and bid decisions are aligned with risk
appetite.
• Updated contract reviews form part of work-winning
governance to ensure robust management of contract risks.
• Technical, design and estimate reviews as part of work
winning process.
• Assessment of sensitivity to key economic factors
including inflation and materials availability during proposal
development, ensuring that appropriate measures are
incorporated into contracts to protect the business from
future volatility.
• Monthly financial contract and account reviews.
• Ongoing monitoring of supplier performance and invoicing
cost trends.
• Centralised procurement of materials and goods sourced
from outside the UK to ensure an optimised approach to
managing exchange rate movements and external effects
on materials supply.
Project set-up,
mobilisation
and delivery
Working with our customers, we manage
some of the most complex and challenging
infrastructure projects in the UK, and this
relies on rigorous planning, risk management
and execution in delivery. Failure to effectively
plan, mobilise and manage these complex
projects can result in delays, impacting our
customers and our market reputation for
delivery excellence.
Risk trend: Neutral
• Robust planning, estimating and risk identification and
analysis during proposal development to form a stable,
deliverable baseline for delivery.
• Compliance with all aspects of the technical and design
gate approvals.
• Launch mobilisation capability to ensure readiness for
delivery, resource requirements and systems prerequisites
are addressed promptly.
• Formal contract closure process to ensure that all aspects
of work are complete.
• Launch and deploy the integrated project controls
capability for all complex delivery projects.
• Contract management gates and change control processes.
Procurement
and supply
chain
performance
A significant proportion of our work is delivered
through our supply chain, and supplier
selection and performance are therefore
critical to our ability to fulfil our commitments
to our customers. Issues with supplier
resourcing, product quality or performance
can adversely affect project delivery, contract
performance and our reputation.
Risk trend: Neutral
Standards, processes and governance for
supplier selection, performance monitoring
and onboarding have been strengthened,
with benefits expected to be realised from
2025 onwards.
• Procurement process for evaluating potential options and
selecting the appropriate supplier.
• Enhanced standards for monitoring supply chain
performance.
• Continued drive on prompt payment of supplier invoices.
• Launch new ‘How to Buy’ process covering end-to-end
lifecycle of supply chain activities.
• Revised Supplier Code of Conduct.
• Implementation of improved procurement schedule
and demand planning.
• Early development of supply chain strategy within
work winning process.
53Strategic ReportOverview Governance Financial Statements
RiskManagement continued
Risk Description and impact Key controls and mitigations Strategic Link
People:
attracting,
developing,
and retaining
talent
The successful implementation of our
strategy is dependent on our ability to
attract and retain the skills and experience
required to deliver our portfolio of work,
lead specialist teams and continue to grow
our market share. In an increasingly tight
skills market, we have continued to focus on
improving our understanding of future skills
needs and on improving the Costain offer.
We also recognise that developing skills
and experience is essential in delivering our
current and future needs, building resilience
and providing development opportunities for
our people. Failure to invest in these matters
would hamper our growth, reduce employee
engagement and increase attrition, impacting
costs and performance.
Risk trend: Increasing
Growth in key sectors has increased demand
for talent, while available skills and resources
remain constrained both locally and nationally.
We increased the size of our graduate intake
in 2024 and are investing in upskilling and
targeted development programmes alongside
recruitment to meet demand.
• Strengthening of workforce planning including longer-term
demand forecasting for key skills aligned with Group and
divisional business plans.
• Development and implementation of a new people system
to underpin a more candidate-led automated experience,
while improving efficiency and effectiveness of the
attraction, recruitment and on-boarding processes.
• Career path framework, supporting recruitment and
providing greater visibility of development paths across
job families.
• Learning and development curriculum and targeted
development programmes for core skills and emerging
leaders. Clear total reward strategy, regular review, and
external benchmarking of our offer, ensuring we keep
pace with market requirements.
• Targeted enhancement to talent management and
development in key functions to increase mobility and
visibility of opportunities.
• Employee communication and engagement channels
and forums – listening and acting on feedback.
Financial
resilience:
maintaining a
strong balance
sheet, access
to banking
facilities and
managing
our legacy
pension
scheme
A strong balance sheet is a prerequisite for
many of the opportunities we pursue and the
contracts we deliver for our customers. Failure
to manage the legacy defined benefit pension
scheme (so that the liabilities are within a
range appropriate to our capital base) could
also adversely impact our balance sheet.
Risk trend: Reducing
Healthy financial performance, a strong
balance sheet and good relationships with
our banks, alongside the appointment of a
professional sole pension trustee have helped
to improve this risk during 2024.
• Monthly business review to monitor status of all contracts
and ensure performance is aligned with expectations.
• Quarterly profit and cash forecast produced for current
and following fiscal year including monitoring of covenant
compliance and cash headroom and liquidity.
• Ensuring alignment of customer and supply contract
payment terms to support effective control of
working capital.
• Development of three-year investment for critical unlocks
(digital tools, capabilities) to support business plan.
• Regular monitoring, in conjunction with the trustee, of asset
performance, pensions regulations, Company covenants,
scheme funding and liability management.
• Appointment of professional sole pension trustee to
manage legacy pension scheme, providing greater clarity
on investments and market conditions.
Link to strategic priority
Planet
People Performance
Costain Group PLC | Annual Report and Accounts 202454
Risk Description and impact Key controls and mitigations Strategic Link
Information
security:
systems
disruption
and data
protection
Our work is enabled by safe, secure and
resilient operating systems. Disruption
to these systems, for example as a result
of an outage or a targeted cyber-attack,
would impact our ability to continue our
normal operational activities efficiently.
Unauthorised disclosure of Costain, customer
or third-party data could result in financial
penalties, loss of competitive advantage or
reputational damage.
Risk trend: Increasing
As in 2023, the frequency and sophistication
of cyber-attacks continues to increase.
• Maintaining Cyber Essentials Plus (CE+) and ISO 22301
(Security and Resilience) accreditation.
• Costain information security strategy integrates information
systems, personnel and physical aspects in order to
prevent, detect and respond to information security threats
and data loss.
• Continual focus on improving cyber resiliency in technology
and people, improving our security education, training and
awareness (SETA).
• Ensuring all employees comply with mobile device
management platform requirements.
• Develop early engagement and awareness of Costain
security and Information systems requirements with work
winning team.
• Conduct data discovery and scanning audit across the
business.
• Review and update as necessary our system configuration
assessments and Automatic Information Protection
protocols.
Climate
change and
sustainability
Protecting our planet is one of our
strategic priorities. Failure to deliver on our
Environmental, Social and Governance (ESG)
targets, could damage our reputation in the
eyes of our employees, customers and other
stakeholders. Our operational activities and
contract performance could also be impacted
by future changes in climate, and an increase
in the frequency of major weather events in
the UK.
Risk trend: Neutral
We reset our climate change action plan
in 2024 to reflect current UK Government
policy, industry progress, and recognise the
external factors which will influence our path
to reducing Scope 1, 2 and 3 emissions (see
pages 36 to 40 for details).
• Annual strategy and business planning cycle – functional
business plans reviewed for alignment with climate change
action plan.
• Greenhouse gas (GHG) emissions baseline set for in-flight
operations.
• Embedding sustainability assurance into work-winning
governance and proposal development.
• Assessment of the potential contractual impact of
weather event delays, ensuring adequate provision and/or
protection is incorporated into agreements.
• Consideration of climate change impact on materials, assets
and product life as part of technical design process and
gate approvals.
• Climate risk and ESG awareness training for all senior
managers.
• Develop GHG reporting dashboards.
Delivering
the benefits
of our
Transformation
programme
Our Transformation programme was
undertaken to make changes to Costain’s
organisation, processes and systems, which
are critical to increasing profitability and
resilience, as well as provide a platform for
growth. Failure to manage dependencies
between concurrent workstreams, embed
changes effectively and/or realise the
required benefits could impact our ability
to deliver our planned strategy, operating
results, and shareholder value.
Risk trend: Reducing
Changes made through Transformation have
improved our organisation, starting from
the clarification of our vision and strategy,
through to improvements to our business
and operating models. The Transformation
programme has now achieved and exceeded
our original financial and non-financial
targets, strengthening the organisation and
supporting our continued growth. While the
programme was closed at the end of 2024,
we continue to make improvements as part
of our business-as-usual activities.
• Dedicated governance and gated approvals process
including alignment with our change framework.
• Transformation Steering Committee responsible for
reviewing and approving new requests for change, and
amendments to the existing scope of initiatives.
• A central management office to coordinate transformation
efforts and monitor progress against an integrated
transformation plan.
• Sequencing of initiatives to reflect the capacity to manage
and absorb change.
• Benefits realisation plan in place for all initiatives.
• Embed a post close-out review of benefits attained by
the projects.
• Produce a Transformation programme close out report.
55Strategic ReportOverview Governance Financial Statements
Assessing the Group’s prospects
The Group’s prospects are assessed through the annual strategic
planning process, which involves the creation of five-year
divisional business plans which are reviewed in detail by the
Executive Board.
To create these plans, each division assesses external factors
– market spend and emerging trends, regulatory environment,
legislative spend, strategic national needs and our customers’
business plans, and internal factors – including capability, skills,
technology and thought leadership.
This results in a set of objectives and a clear implementation
plan, considering known and emerging risks and opportunities
over a broader horizon. This includes a five-year financial plan,
with strategic objectives including targets for key accounts and
strategic campaigns, resourcing and skills planning as well as
research and development activity to support our customers to
address complex infrastructure challenges.
The Board scrutinises and monitors the strategic and financial plans.
Assessing the Group’s viability
While the Group has a five-year strategic planning horizon, our
order book visibility is stronger over the medium-term period
and our implementation workstreams are focused on the
more immediate term. Therefore, the directors believe that an
appropriate period to consider the Group’s viability is over three
years to December 2027.
The directors have assumed that the current revolving credit
facility remains in place with the same covenant requirements
through to September 2026 and that the Group would either
renew the facility thereafter or have sufficient time to agree
an alternative source of finance, on terms which are broadly
consistent with the current facility for the remainder of the
three- year period assessed.
The assessment of viability has been made considering the
Group’s principal risks (as outlined on pages 52 to 55). The
directors consider the likelihood of all these risks crystallising
together to be remote and have therefore tested scenarios where
a number of these risks materialise together in a plausible, but
severe and prolonged combination. These downside scenarios
reflect a combination of circumstances, including the potential
impact of a significant decline in activity resulting from an inability
to secure new work within the estimated work to be obtained and
or deliver it at improved planned margins, the impact of a major
safety incident or data breach and associated fines, the impact of
a working capital decline, the loss of key management and inability
to recruit the right capabilities, and a change in Government policy
impacting investment and procurement programmes.
Viability statement and
going concern assessment
ViabilityStatement
The main focus has been the impact of these downside scenarios
on the Group’s ability to comply with the leverage, interest and
liquidity covenants as set out within its banking facilities, not the
absolute value of net debt since, as evidenced by a reverse stress
testing of each of the covenants, the Group maintains a significant
cash headroom to absorb any further unforeseen losses.
In the event that the risks modelled in the severe but plausible
downside scenarios were to materialise together, the Group would
be able to continue operating within its covenants and the Group’s
credit facilities would not be exhausted.
Viability statement
In accordance with Corporate Governance Code 2018 Provision
31, the directors have assessed the prospects of the Group over a
longer period than the 12 months required by the ‘Going Concern’
provisions. Based on the results of this analysis, the Board
confirms that it has a reasonable expectation that the Group will
be able to continue in operation and meet its liabilities as they fall
due over the three-year period to 31 December 2027.
Going concern
The Group’s going concern statement is detailed in note 2 of the
consolidated financial statements on page 145.
Strategic Report
Our 2024 Overview and Strategic Report on pages 1 to 57 have
been reviewed and approved by the Board of directors and signed
on its behalf by
Nicole Geoghegan
Company Secretary
10 March 2025
Costain Group PLC | Annual Report and Accounts 2024
56
Non-financial and sustainability information statement
Our reporting is compliant with the Non-Financial Reporting requirements contained in sections 414CA and 414CB of the Companies Act
2006. The below table, and the information it refers to, is intended to help stakeholders understand our position on key non-financial
matters. This is in addition to the reporting we already do under the Carbon Disclosure Project (CDP) and the Global Reporting Initiative.
1
Board diversity and inclusion
This policy sets out the chair and Board of
directors’ commitment to maintaining a diverse
and inclusive Board, leading by example and
setting the expectation that the Group operates
inclusively and continues to invest in diversity.
The owner of this policy is the chair.
2
Business continuity management
The principles which are to be adopted to ensure
business continuity across the Group are set
out in this policy. The Executive Board sponsor
for this policy is the chief financial officer.
3
Collaborative working
This policy sets out the approach that Costain
management shall take to ensure a collaborative
working environment is maintained and
relationships reflect the requirements of ISO
44001:2017 Collaborative Business Relationships.
The Executive Board sponsor for this policy
is the Group commercial director.
4
Drugs and alcohol
This policy is a declaration of the Board’s
intent to provide a safe and healthy working
environment, free from inappropriate use of
alcohol and drugs in all Costain undertakings.
The Executive Board sponsor for this policy is the
chief executive officer.
5
Environmental
This policy sets out our approach to
environmental management, going beyond
minimising harm to the environment and sets out
the proactive requirements of how our people
must work to meet our ambition to be net zero
carbon by 2045. The Executive Board sponsor
for this policy is the chief executive officer.
6
Ethical business conduct
Bribery prevention, fair and open competition,
insider dealing prevention, fraud prevention,
receipt of gifts and hospitality, and
whistleblowing are all covered by the Costain
ethical business conduct policy. The Executive
Board sponsor for this policy is the general
counsel and company secretary.
7
Health and safety
This policy protects all our stakeholders,
including customers, colleagues and suppliers,
going beyond our statutory duties and
responsibilities. The Executive Board sponsor
for this policy is the chief executive officer.
8
Modern slavery and human trafficking
This policy specifies the mandatory conditions
of employment and contractual conditions
for our suppliers in respect of human rights.
The Executive Board sponsor for this policy
is the chief people and sustainability officer.
9
People
The Costain people policy encompasses
recruitment, development, reward, diversity
and inclusion, health and wellbeing, compliance
with labour/employment and data protection
laws and regulations, wherever we work.
The Executive Board sponsor for this policy
is the chief people and sustainability officer.
10
Social value
This policy sets out the Board’s expectation
for how the Company, its employees, partners
and suppliers undertake social value in alignment
with Procurement Policy Note 06/20 themes.
This policy encompasses Costain’s approach
to social value and transparency in our reporting.
The Executive Board sponsor for this policy
is the chief people and sustainability officer.
11
Sustainable procurement
and supply chain
The Costain sustainable procurement and
supply chain policy stipulates the conditions
of all procurement activity, aligning outcomes
to our ESG commitments and business strategy.
The Executive Board sponsor for this policy
is the chief financial officer.
Policy
Environmental, Social
and Governance (ESG)
and risk management
reporting requirements
and additional information
Environmental
5
10
11
Our ESG programme / pages 34 and 35
Taskforce on Climate-related Financial
Disclosures/ pages 36 to 43
Climate change action plan /
www.costain.com/sustainability/
environmental/
Employees
1
3
4
6
7
8
9
10
Our ESG programme / pages 34 and 35
Board composition and diversity /
pages 70, 78 and 79
Gender and ethnicity pay gap / pages 44
and 45
Human rights
6
7
8
9
10
11
Supplier code of conduct /
www.costain.com/suppliers
Modern slavery statement /
www.costain.com/modern-slavery-
transparency-statement
Social matters
4
8
9
10
11
Our ESG programme / pages 34 and 35
Our Sustainability Report 2024 /
www.costain.com/sustainability/
reports-and-downloads/
Anti-corruption and anti-bribery
6
8
10
11
Supplier code of conduct /
www.costain.com/suppliers
Policy embedding,
due diligence and outcomes
Risk Management / pages 50 to 55
Description of principal risk
and impact on the business
Risk Management / pages 50 to 55
Description of business model
Business model / pages 16 and 17
Non-financial KPIs
KPIs / page 31
57Strategic ReportOverview Governance Financial Statements
BoardofDirectors
Dynamic and effective leadership
Appointed
Skills and Competencies
External Appointments
Tony Quinlan
ACA
Senior Independent Director
Kate Rock
Non-Executive Chair
Alex Vaughan
FRICS, FICE
Chief Executive Officer
Helen Willis
ACA
Chief Financial Officer
Kate was appointed to the Board
in November 2022 and became
chair of the Board and chair of
the Nomination Committee in
December 2022.
Alex was appointed to the
Board as CEO in May 2019.
Helen was appointed to the Board
as CFO in November 2020.
Tony was appointed to the Board
in February 2021, became chair of
the Audit and Risk Committee in
May 2021 and senior independent
director in January 2022.
Kate is an experienced non-
executive director with a
background in corporate
communications and strategy and
brings a strong understanding
of the construction contracting
sector, the application of
innovation and technology to drive
productivity enhancements, and
of government. Baroness Rock
is senior independent director at
Keller Group plc (see below) and
formally a non-executive director
and chair of the remuneration
committee of Imagination
Technologies plc. She was, until
January 2023, a member of the
House of Lords Select Committee
for Science and Technology and
a board member of the Centre for
Data Ethics and Innovation.
Alex has worked in the
infrastructure industry for more
than 30 years and has extensive
experience across programme
delivery, private finance, operations
and business leadership.
Alex joined Costain in 1992
and has been a member of the
Executive Board since 2006.
Before becoming CEO, Alex played
a significant role in Costain’s
transformation into a leading
infrastructure solutions business
through his leadership of the
development and growth of the
Group’s consultancy services.
In his role as managing director,
Natural Resources, Alex delivered
significant growth in profit
and margin. Alex is a qualified
chartered quantity surveyor, has
worked on infrastructure projects
in the UK and internationally,
and held various corporate
roles across HR, strategy, M&A
and corporate development. In
2009 he completed the Harvard
Business School Advanced
Management Program.
Helen has a strong financial
background underpinned by
her profession as a chartered
accountant. She is an experienced
public company chief financial
officer with a high level of
understanding of investor relations
and change programmes, including
in organisations undergoing
periods of strategic change.
Helen has also driven finance
transformation programmes to
significantly improve processes,
systems and culture. She has
worked in multiple sectors and
is highly commercial, able to
balance both short and long-term
goals, develop strategic options
and contribute broadly to the
business. Prior to joining Costain,
Helen held roles as chief financial
officer of De La Rue and Premier
Farnell. She has also held senior
finance roles at Pelican Rouge, AZ
Electronic Materials and HSS Hire.
Tony is a chartered accountant
with a wealth of financial
experience gained during multiple
senior roles in high profile large
companies and as a chair of audit
committees. He also brings to the
Board his business turnaround
experience from his time as CFO
then CEO at Laird. Tony possesses
the recent and relevant financial
experience in accounting and
auditing required. Tony was
previously chief financial officer
of Drax Group, held senior finance
roles at Marks & Spencer and
was senior independent director
and chair of the audit committee
for the Port of London Authority
and non-executive director of
Associated British Ports.
• Keller Group plc; senior
independent director and
non-executive director with
responsibility for workforce
engagement.
• The Royal Countryside Fund;
trustee.
None • Member of the Business in the
Community Leadership Council.
• Hill & Smith Holdings PLC;
senior independent director
and chair of the remuneration
committee.
• Laird Thermal Systems
(Adparatus GmbH); chair and
advisory board member.
NON-EXECUTIVE DIRECTORSEXECUTIVE DIRECTORS
Costain Group PLC | Annual Report and Accounts 2024
58
Steve Mogford
Independent
Non-Executive Director
Amanda Fisher
Independent
Non-Executive Director and
Workforce Engagement Director
Fiona MacAulay
Independent
Non-Executive Director
Steve was appointed to the Board
in November 2023.
Amanda was appointed to the
Board in December 2023 and
became workforce engagement
director in March 2025.
Fiona was appointed to the Board
in April 2022 and became chair of
the Remuneration Committee in
May 2022.
With a firm commitment to ESG,
Steve is an experienced executive
and non-executive director with
extensive expertise in water and
defence, together with experience
of contracting and complex
joint ventures. Steve was chief
executive officer of United Utilities
Group PLC from 2011 until March
2023 and led significant growth
during that period. During 30
years at BAE Systems Plc, Steve
held various senior positions
before being appointed chief
operating officer and a member
of the board. Steve was previously
senior independent director
of G4S plc.
Amanda was CEO of Amey, the
engineering and infrastructure
company, from 2019 until 2022.
With considerable expertise in
transportation, infrastructure and
defence, Amanda restructured the
business, redefining the strategy,
building strong client relationships
and improving contract risk
and performance, leading to its
successful sale in 2022. Prior to
Amey, Amanda held two managing
director positions at Balfour
Beatty plc, improving their market
share in key sectors, and held a
senior management position at the
construction firm, Alfred McAlpine.
Amanda is a passionate advocate
for ESG including diversity
and inclusion.
Following the Board evaluation
carried out in 2024 Amanda
was appointed as the dedicated
workforce engagement director.
See page 66 for more details.
Fiona is an experienced
non-executive director and
remuneration committee chair
within the resources and industrial
sectors including upstream oil
and gas. Fiona has extensive
experience in ESG, has completed
Diligent’s Climate Leadership
Program and is a member of
Chapter Zero, a community of
business leaders taking ownership
of the climate challenge. Fiona has
experience in operations, large
programmes, stakeholder and
global supply chain management
from BG Group, Mobil, Rockhopper
Exploration and Echo Energy.
Fiona is a past president of
American Association of Petroleum
Geologists Europe.
• QinetiQ plc; senior independent
director.
• Intertek Group plc; non-
executive director.
• Ferrexpo plc; senior
independent director and chair
of the remuneration and ESG
committees.
• Chemring Group PLC; senior
independent director.
• Dowlais Group plc; non-
executive director.
• University of Plymouth;
independent external governor.
Audit and Risk Committee Nomination Committee Remuneration Committee Chair
C
NON-EXECUTIVE DIRECTORS
59Strategic ReportOverview Governance Financial Statements
ExecutiveBoard
Running the business
Appointed
Skills and Competencies
External Appointments
Catherine Warbrick
Chief People and
Sustainability Officer
Nicole Geoghegan
LLB
General Counsel and
Company Secretary
Alex Vaughan
FRICS, FICE
Chief Executive Officer
Helen Willis
ACA
Chief Financial Officer
Appointed in July 2022.Appointed in May 2019. Appointed in November 2020. Appointed in September 2019.
Nicole is a highly experienced
general counsel and company
secretary with an extensive
background in major/mega
projects and infrastructure,
covering the full asset lifecycle.
Nicole spent six years on the
HS2 project as general counsel
and company secretary prior to
joining Costain. She has significant
international experience in rail/
transport, engineering and project
services and is an expert in public
sector procurement, fit-for-
purpose governance and effective
risk management.
For more information please
go to page 58.
For more information please
go to page 58.
Catherine joined Costain in 2006
and has performed a number
of roles, including as director of
learning and development and
corporate responsibility (CR),
and investor relations director.
In 2019, Catherine became Group
HR director and in 2022 took
on additional responsibility for
sustainability, becoming chief
people and sustainability officer.
Highlights of Catherine’s career
with Costain include developing
and implementing the Group’s
first CR strategy, achieving
Platinum status in Business in the
Community’s CR Index in 2013,
driving change to achieve the
Group’s recognition in the Times
Top 50 Employers for Women
2018–2021 and Costain being cited
as a game changer in 2019 for its
work on gender parity in early
careers recruitment. Catherine is
a qualified executive coach and
graduated with an honours degree
in environmental science.
NoneNoneFor more information please
go to page 58.
None
Costain Group PLC | Annual Report and Accounts 202460
Abida Lalani
Director of Strategy and
Transformation
Jonathan Willcock
Managing Director of
Transportation
Sam White
Managing Director of
Natural Resources
Paul Morris
Group Commercial Director
Appointed in October 2022. Appointed in April 2024.Appointed in January 2022. Appointed in July 2024.
Abida joined Costain as
change programme director in
November 2019 and is focused on
accelerating the implementation
of Costain’s strategy across its
four markets in Transport, Water,
Energy and Defence. Abida has
since also taken on day-to-day
strategy and planning for the
Group, oversees business-
wide change and improvement
activities, in addition to being
accountable for organisational
quality in line with ISO 9001. Prior
to Costain, Abida worked for
HSBC, KPMG and Lloyds Banking
Group where she formed a niche
in large-scale transformation
programmes, in particular
integration or separation activity
as a result of mergers, acquisitions,
divestments or carve-outs. She
has lived and worked across the
UK and continental Europe, the
USA, Middle East and Asia. Abida
is also the executive sponsor for
the Religious Ethnic and Cultural
Heritage (REACH) Network
at Costain.
Jonathan was appointed
managing director of
Transportation in April 2024.
He has a wealth of experience
in infrastructure and joined
Costain from Skanska, where
he was managing director of
Skanska UK’s infrastructure
division, working to increase
revenue and market share and
delivering complex projects in
sectors including highways, rail,
energy and water. Prior to that,
Jonathan was managing director
of Alstom Transport UK’s systems,
signalling and infrastructure
division, growing the business and
winning and delivering key work
for Network Rail, TfL and other
transport bodies.
Sam was appointed managing
director of Natural Resources in
January 2022. He has a strong
track record in developing
strategic customer relationships
and delivering enhanced business
performance and growth, gained
through a variety of challenging
multi-sector roles in multi-national
organisations. Sam joined Costain
from Babcock International Group
where he held various leadership
roles across defence, energy and
engineering services. Prior to this
he held roles with BAE Systems
and General Dynamics. Sam is a
qualified executive coach and is a
passionate advocate of inclusion
and diversity.
Paul was appointed as Costain’s
Group commercial director in
July 2024 after originally joining
Costain in August 2011. Paul
has performed a number of
commercial leadership roles across
the business, most recently as
commercial services director.
He has 30 years of experience
in people, project and commercial
management. Prior to joining
Costain he was group commercial
director for Promanex Group.
Paul holds a master’s degree
in business administration from
Newcastle University.
NoneNoneNone None
61Strategic ReportOverview Governance Financial Statements
71%
(5 of 7)
57%
(4 of 7)
0%
(0 of 7)
GovernanceataGlance
Leading a
responsible business
UK Corporate Governance Code – application of Code Principles
The table below sets out where the required reporting on the Principles can be located in this 2024 annual report.
1 Board leadership and Company purpose
A Effective Board / pages 58, 59, 70 and 71
B Purpose, values and culture / pages 80 and 82
C
Governance framework and Board resources /
pages 30, 31, 50 to 55, 68 and 69
D Stakeholder engagement / pages 32, 33 and 74 to 77
E Workforce policies and practices / page 57
2 Division of responsibilities
F Board roles / pages 68 and 69
G Independence / pages 58, 59, 69 and 70
H
External appointments and conflicts of interest /
pages 58, 59, 72 and 125
I
Key activities of the Board during 2024 /
page 64
3 Composition, succession and evaluation
J Appointments to the Board / pages 91 to 93
K
Board skills, experience and knowledge, service length /
pages 58, 59, chart below and 117
L Annual Board evaluation / page 71
4 Audit, risk and internal control
M
Financial reporting, external auditor and internal audit /
pages 86 to 90
N Review of the 2024 annual report / page 72
O
Internal financial controls and risk management /
pages 50 to 55, 73 and 89
5 Remuneration
P
Linking remuneration with purpose and strategy /
pages 95 and 96
Q Remuneration policy review / pages 100 to 103
R Performance outcomes in 2024 / pages 95, 97 and 107 to 109
Strategic targets / pages 112 and 113
Board
independence
Board –
length of service
Board diversity –
gender
Board diversity –
other ethnicity
Non-independent
directors
2
Independent
directors
5
<1 year 0
1–3 years 4
>3 years 3
Male 3
Female 4
White British 7
Other ethnic groups 0
Costain Group PLC | Annual Report and Accounts 202462
Governance case study
In Spring 2024, the Board commenced an external
performance review. A structured and considered process
was undertaken to select the consultant to work with the
Board on the review. The goal of the review was to support
the Board in its endeavour to be a continuously improving
high-performing body that contributes significant value to
Costain’s shareholders (and its customers, employees and
other stakeholders). The review was conducted in accordance
with the Chartered Governance Institute’s Code of Practice for
Board Reviewers (published September 2023) and considered
the performance of the Board and its committees, effectiveness
of the Chair and also (whilst not a formal performance review)
the individual inputs of each Board member.
Clare Chalmers was appointed to conduct the review in
May 2024. Ms Chalmers attended a detailed meeting with
the chair and company secretary at the outset to discuss
key issues, business performance and opportunities. Through
in-depth interviews, Ms Chalmers then considered: Board
composition, culture, dynamics and leadership; succession
planning; the Board’s role in connection with Costain’s strategy,
performance and risk appetite; the quality of the Board’s
decision making; stakeholder engagement by the Board; and
quality of Board meetings, Board papers and secretariat support.
Ms Chalmers attended the October Board in person to feed
back her findings and suggested actions, leading to an
engaging discussion. The Board agreed certain focus areas in
response, which are outlined on page 71, all of which are aimed
at ensuring the Board continues to add value to Costain’s
shareholders and all other stakeholders.
“ The Board was delighted that the
external review concluded that
both the Board and the business
were considerably stronger than
the last review, the Board was
collegiate, experienced and highly
skilled, comprised of non-executive
directors with good knowledge of
the business’ markets and clients,
and committed executives, with
high levels of integrity and ethical
standards.”
Kate Rock
Chair
For more information / page 66
63Strategic ReportOverview Governance Financial Statements
January (brief update meeting)
February
GovernanceataGlance continued
2024 key activities
• Executive share plan grants
• Share dilution
April (written circulation)
• Board strategy day including review of
market trends, options for growth and
operating model direction
• Workforce engagement report
• Capital allocation
• Risk deep dive – procurement
and supply chain
• D&O insurance renewal
• Code of Conduct
• Move of Head Office to 70 St Mary Axe
July
• Business Update
• 2024 AIP and 2021 LTIP performance
against targets
• Setting targets for 2024 short and long
term incentives (AIP and LTIP)
• Executive Board salary and chair
fee increases
• Draft Directors’ Remuneration Report
• FY24 results announcement,
Annual Report and Accounts
• External audit feedback
• ESG Report
• Gender Pay Gap Report
• Modern slavery statement
• IT Strategic Update (inc. Cyber Security)
• Reduction of nominal value of
Ordinary Shares
• Distributable reserves, cash
and scrip dividends
• Notice of AGM
• 2024 employee engagement
survey results and actions
• Board skills and competencies
• NED Letters of appointment
• Retirement of Bishoy Azmy
• Final approval of share plan vestings
and targets
• Risk deep dive – major H&S incident
and environmental incident
March
• AGM trading announcement
• AGM matters and voting
• Risk deep dive – contract terms and
economic factors
• 2024 quarterly finance update and
forecast
• Corporate governance presentation
• Analyst and investor feedback on
FY23 results
• Group risk management assurance
framework
• Report from Internal Auditor
• 6-monthly fraud and whistleblowing
report
• Internal controls observations
May
• HY24 interim results announcement
• Capital allocation, dividend and share
buyback programme
• Energy sector market and growth plan
• 2024 quarterly finance update and
forecast
• External auditor effectiveness
• Report from Internal Auditor
• Sharesave invitation approval
August
• Risk deep dive – climate change
• Analyst and investor feedback
on HY24 interim results
• Re-consideration of net zero targets
• Board performance review feedback
October
• Group business plan
• 2024 quarterly finance update
and forecast
• Board performance review actions
November
• 2025 budget
• Risk appetite and review of principal
and emerging risks
• Risk management and control systems
• Transformation programme outcomes
• External audit engagement and fees
• Report from Internal Auditor and internal
audit plan for 2025
• 6-monthly fraud and whistleblowing
report
• Internal auditor effectiveness
• Wider workforce salary budget 2025
• Succession planning
• Board diversity policy
• Consideration of Sustainability
Committee and Workforce engagement
director
• Schedule of Matters reserved to the
Board and Committee Terms of Reference
December
At each full Board meeting, the Board considers a safety
moment, a safety, health and environment (SHE) report,
CEO (including business and project updates) and CFO
reports, an investor relations update, a legal update, a
people and sustainability report, a risk deep dive and,
if required under the matters reserved for the Board,
work-winning approvals.
Board
Audit and Risk Committee
Nomination Committee
Remuneration Committee
The main areas of discussion of the Board and
Committees in 2024 are shown in this timeline.
Costain Group PLC | Annual Report and Accounts 202464
Chair’sIntroduction
The Board ensures the
Company’s governance
processes support growth
and business performance.
“ The Board believes that
good corporate governance
underpins a successful and
sustainable business.”
Kate Rock
Chair
65Strategic ReportOverview Governance Financial Statements 65Strategic ReportOverview Governance Financial Statements
Chair’sIntroduction continued
Dear shareholder
In 2024, the Board continued to maintain high standards of
corporate governance across the Group to support business
performance. It promoted Costain’s values, reinforced diverse
views and constructive challenge, took account of the views of
the workforce and wider stakeholders and oversaw the Group risk
management programme. The Board complied with the 2018 UK
Corporate Governance Code (the Code) during the year.
Board and Committee governance
Building on the deep dive review conducted by our company
secretary and general counsel in 2023 into our Board and
Committee governance framework and the work undertaken as
part of the external review into the effectiveness of the Board
in 2024, the Board has kept the governance structure and
committee membership under review and is satisfied that the
three Board Committees – Nomination Committee, Remuneration
Committee, and the Audit and Risk Committee – have all operated
effectively during the year. Reports from the chair of each of
these committees can be found on pages 87 to 90, 92 to 93, and
97 to 98.
Board changes
Following the appointment of Steve Mogford and Amanda Fisher
in 2023, no additional directors were appointed in 2024. The
Board keeps the membership of the Board under review and the
Nomination Committee regularly monitors the balance of skills
and competencies on the Board. The Board has concluded that
the Board is the right size and composition for now, as the Board
collectively has a broad range of relevant skills and experiences
for a company such as Costain. Further details of the skills matrix
we use to monitor this is given on page 93.
On 31 March 2024, Bishoy Azmy retired from the Board after four
years’ service. I should like to extend our thanks to him for his
contribution to the Board in that time.
Sustainability Committee
During the year, the Board discussed on a number of occasions,
the establishment of a Sustainability Committee with the remit to
oversee sustainability matters. While the Board recognised that
the Board as a whole is responsible for environmental, social and
governance matters and was concerned that delegation of these
matters to a committee could appear to lessen the importance
of these matters, we also felt that it was important that these
matters received the time and attention they deserved, and
concluded this could best be done by a dedicated committee.
During 2025, the Board will consider this further.
Workforce Engagement Director
For many years the Board has taken the opportunity to meet
employees and the wider workforce and listen to their views when
conducting site visits both collectively and individually. During the
course of 2024, Board members attended 14 operational site visits
including to Devonport, Heathrow, the A30 and to some of our
key customers, including HS2, Severn Trent and Cadent. These
visits give us additional insights into how our culture, values and
behaviours are lived on the ground. We have been delighted to
see the commitment of our employees (and our supply chain) to
their work and to safety in particular and to listen to the concerns
of the workforce at multiple levels across the Company. The
visits also enhance our understanding of the business and our
relationship with key customers. After each visit, we submit a brief
report summarising our observations for the management team.
During the year, we discussed whether we should nominate
a Board member with specific responsibility for workforce
engagement, which is the practice adopted by a number of other
companies and is one of three workplace engagement methods
specifically recognised by the 2018 Code. In December 2024, we
decided that while all Board members would still be encouraged
to attend operational site visits and to engage with our workforce,
we would nominate a director with specific responsibility for
workforce engagement. I am delighted that Amanda Fisher, who
joined the Board in 2023 and undertook a number of site visits
during 2024, has agreed to be act as our workforce engagement
director with effect from 4 March 2025. Further information may
be found on page 71.
Board Performance Review
This year, our Board Performance Review was externally
facilitated, and we were delighted that the final report concluded
that both the Board and the business were considerably stronger
than at the previous external effectiveness review. It noted
that the Board was collegiate, experienced and highly skilled,
comprised of non-executive directors (with good knowledge of
the business’ markets and clients) and committed executives (with
high levels of integrity and ethical standards). The report also
commended the strengthening of our risk function.
The Board discussed the review at our meeting in October
and agreed actions in response. Plans are in place to better
consolidate the information presented to the Board, further
evolve the risk management programme, appoint a workforce
engagement director and consider setting up a Sustainability
Committee. Further details may be found on page 71.
Costain Group PLC | Annual Report and Accounts 2024
66
Strategy
The Board establishes the Group’s purpose, values and strategy,
ensuring the Company’s culture is aligned. In shaping the
Group’s strategic direction, the Board seeks to ensure that good
governance standards are embedded throughout the organisation
to support our purpose and business performance.
In 2024, the Board continued to work hard to build stronger
investor and market confidence in the Company. We are now
seeing the benefits of our efforts. By means of implementing the
various elements of transformation and delivering our strategy,
we believe we can achieve strong growth. In July the Board
came together for a strategy session at which the ambition for
2030 was agreed and growth opportunities were considered and
prioritised. Business improvements were identified, such as in
operational delivery performance, and we reviewed our portfolio,
competitive differentiators and customer relationships. Further
details of our strategy are on page 12.
Risk management
Effective risk management is a fundamental aspect of
the Group’s operating, financial and governance activities
(see pages 50 to 55).
During the year, management undertook its annual review of
the Company’s risk appetite and risk management framework,
the outcomes of which were endorsed by the Board, and the
Audit and Risk Committee, as appropriate. The Board conducted
reviews of several of the Group’s principal risks, including climate
change, procurement and supply chain, health and safety incident
and environmental incident, market conditions and contract risk
allocation. The Board confirms that it has completed a robust
assessment of the Company’s emerging and principal risks.
Further details of all Audit and Risk Committee matters
are provided in the Audit and Risk Committee Report on
pages 86 to 90.
In addition, Board members use their engagement visits to sites
(see page 82) as an opportunity to lead conversations on risk.
Culture
The Board has an important role in setting and developing the
culture of the Company and uses several leading and lagging
indicators to make an informed assessment of the Company’s
culture (see page 80). Towards the end of 2024, the Company
carried out its annual Group-wide employee engagement survey
with support from Best Companies. We were delighted with the
participation level as it gives us a wealth of information on what
we do well and areas for focus, together with our accreditation,
for the third year, as a Best Companies One Star organisation,
meaning Costain is a ‘very good’ company to work for (see page
83 for more information).
Kate Rock
Chair
10 March 2025
Compliance with the UK
Corporate Governance Code 2018
As a listed company on the London Stock Exchange, and in
respect of the financial year ended 31 December 2024, the
Company is reporting in accordance with the UK Corporate
Governance Code 2018 (the 2018 Code) which sets out
standards of good practice in relation to the following principles:
(i) board leadership and company purpose;
(ii) division of responsibilities;
(iii) composition, succession and evaluation;
(iv) audit, risk and internal control; and
(v) remuneration.
The 2018 Code is published by the Financial Reporting Council (FRC) and is
available on its website www.frc.org.uk
During 2024, Costain was compliant with all provisions of the
UK Corporate Governance 2018 Code.
With effect from 1 January 2025, most of the 2024 UK
Corporate Governance Code (the 2024 Code) applies for all
listed companies.
During 2025, Costain intends to comply with the 2024 Code.
When the new provision 29 (relating to the monitoring and
review of all material internal controls) comes into effect in
2026, Costain also intends to comply with this provision.
The Audit and Risk Committee Report on pages 86 to 90,
the Nomination Committee Report on pages 91 to 93, the
Directors’ Remuneration Report on pages 94 to 120 and the
description of the Board’s diversity policy pages 78 and 79
are also incorporated into this report by reference.
On the following pages we explain our approach to
corporate governance, demonstrating how the Board and
its Committees have fulfilled their responsibilities to ensure
robust governance practices are embedded throughout the
Group to support business performance.
67Strategic ReportOverview Governance Financial Statements
OurGovernanceStructure
Delivering effective
decision-making and
meeting corporate
governance standards
The Group’s governance structure is established and overseen by the Board.
Costain Group PLC Board of directors
Key responsibilities:
The Board is collectively responsible for overseeing and guiding the Company and holding management to account.
The Board’s main role is to create long-term sustainable value for shareholders by providing prudent leadership and taking
into account the interests of all stakeholder groups. It does this by setting the Company’s strategic priorities and overseeing
their delivery, ensuring that the necessary financial and other resources are available, and by maintaining a balanced approach
to risk within a framework of effective controls.
Board Committees
Key responsibilities:
The Board has established Committees which are responsible for audit and risk, remuneration, and appointments
and succession. Each Committee plays a vital role in ensuring that high standards of corporate governance are
maintained throughout the Group, which enhances the performance of the business.
Remuneration Committee
Key responsibilities:
Determines the remuneration for
the chair, executive directors and
certain senior managers.
Oversees Costain’s overall remuneration
policy, strategy and implementation.
This includes the alignment of incentives with
reward and culture and takes into account
employees’ pay and rewards when setting
the policy for directors’ remuneration.
Audit and Risk Committee
Key responsibilities:
Monitors and reviews the integrity
of Costain’s financial statements.
Manages the relationship
with the external auditor.
Oversees the Company’s systems for internal
control (including the internal audit plan and
audit outcomes) and risk management.
Oversees the Company’s
whistleblowing framework and receives
reports on investigation outcomes.
Nomination Committee
Key responsibilities:
Monitors and reviews the composition of
the Board and its Committees to ensure
that the right structure, skills, diversity and
experience are in place for the effective
management of the Group.
Reviews management development,
succession planning and the talent pipeline
in respect of the Company’s senior executives.
Costain Group PLC | Annual Report and Accounts 202468
Safety, Health and Environment
(SHE) Committee
Key responsibilities:
Responsible for setting and monitoring compliance
with the Group’s SHE policies.
Acts as a consultation forum to enable best advice to be given
to the Executive Board (and to guide the Group SHE director and
chief people and sustainability officer) on matters relating to
safety, health, environmental protection and climate change.
Risk and Assurance
Committee
Key responsibilities:
Reviews and guides Costain’s approach
to risk management including trends.
Considers any whistleblowing investigations and trends.
Monitors delivery of the internal audit plan, reviews
audit outcomes and tracks actions to completion.
Transformation Steering Committee
Key responsibilities:
Provides strategic direction, sets the priorities and monitors
the progress of Costain’s transformation agenda.
Strategic Investment
Panel
Key responsibilities:
Responsible for approving significant
levels of bid resourcing and for approving
(or endorsing to the Board) certain
investments.
People
Committee
Key responsibilities:
Makes decisions in relation to people
on behalf of the Executive Board.
Makes recommendations to the Executive
Board (or Board, as relevant) in relation to
strategic, people matters.
Monthly/Quarterly
Business Reviews
Key responsibilities:
Reviews financial and operational
performance of projects to ensure
economic and efficient delivery.
Executive Board
Key responsibilities:
Accountable for the day-to-day running of the business, delivering the Group strategy, business plan
and budget and managing the operational and financial performance of the Group.
Further
information
No changes were made
to the schedule of
matters reserved to the
Board or to the terms
of reference of Board
Committees in 2024.
The matters reserved for
the Board and Committee
terms of reference,
which are reviewed at
least annually, can be
viewed in the corporate
governance section of
the Company’s website.
The members of each
Committee and details
of their attendance are
shown on pages 58, 59,
and 70.
How we divide up our responsibilities
Chair
The chair, Kate Rock, is responsible for the effective leadership and operation of the
Board. The chair promotes high standards of governance and supports and guides
the CEO.
Chief
executive
officer
The CEO, Alex Vaughan, is responsible for managing the business of the Company
through the implementation of policies and strategies approved by the Board. The CEO
maintains constructive dialogue with the chair, the Group’s shareholders on strategy
and performance, and other stakeholders.
Senior
independent
director
The role of the senior independent director, Tony Quinlan, involves providing a
sounding board for the chair and providing support to her, acting as a point of contact
for shareholders to raise any concerns not addressed adequately through normal
channels and meeting with the other non-executive directors, without the presence
of the chair or executive directors, to discuss such matters as the chair’s performance.
Non-executive
directors
The non-executive directors all bring valuable experience, insight and perspective to
the Board, through their former or current executive roles and their other non-executive
positions, which are held across a wide range of businesses and disciplines.
This facilitates robust input and decision-making by the Board as a whole. The
non-executive directors, including the chair, also meet without the executive directors
present from time to time as a matter of good corporate governance.
Architecture Board
Key responsibilities:
Manages/oversees Costain’s overall enterprise systems architecture
to ensure efficiency, effectiveness and alignment of same.
69Strategic ReportOverview Governance Financial Statements
AttendanceandComposition
Meeting attendance
The Board meets regularly, with seven scheduled full meetings during the year together with a separate strategy session. The directors’
attendance record at these meetings and Board Committee meetings for the year ended 31 December 2024 is shown in the table below.
Also shown below is the directors’ attendance record at a scheduled brief update meeting.
For the Board and Committee meetings, attendance is expressed as the number of meetings that each director attended out of the
number they were eligible to attend as members. The table below does not indicate regular attendance of non-members. No director
attended the Remuneration Committee for discussions on their own remuneration.
Board attendance
Scheduled full Board
and strategy meetings
Maximum 7
Other brief update
Board meetings
Maximum 1
Audit and Risk
Committee
Maximum 4
Remuneration
Committee
Maximum 3*
Nomination
Committee
Maximum 2
Executive directors
Alex Vaughan 7/7 1/1 – – –
Helen Willis 7/7 1/1 – – –
Non-executive directors
Kate Rock 7/7 1/1 – – 2/2
Bishoy Azmy
1
0/1 0/1 0/1 – 0/1
Amanda Fisher 7/7 1/1 4/4 3/3 2/2
Fiona MacAulay 7/7 1/1 4/4 3/3 2/2
Steve Mogford 7/7 1/1 4/4 3/3 2/2
Tony Quinlan 7/7 1/1 4/4 3/3 2/2
* Matters in relation to the executive share plan grants in April 2024 were agreed by written circulation.
1 Bishoy Azmy, who is Dubai-based, was the designated representative director of ASGC Construction L.L.C. (ASGC) who was, until 13 September 2024 our largest
shareholder. Bishoy was a non-independent director until 31 March 2024. Following an accident in early 2023 and a period of recovery, in September 2023 Mr Azmy
appointed Kate Teh, the London-based general counsel and company secretary of Innovo Holding Limited, a company connected to ASGC, as his representative to attend
Costain meetings where he was unable to attend. This enabled ASGC to continue to input at meetings. Ms Teh, who did not vote at meetings, attended two Board meetings,
one Audit and Risk Committee meeting and one Nomination Committee meeting in the relevant period. Bishoy continued to meet with Board members on a number of
matters and accordingly his knowledge and experience were available to Costain to support delivery of the strategy.
Board composition
The Board currently comprises the chair, two executive directors
and four independent non-executive directors. The membership of
the Board and biographical details of all the directors can be found
on pages 58 and 59.
The non-executive directors have a range of business, construction,
risk management, sector and financial experience that is relevant
to the Company to support the delivery of the strategy. The Board
is enhanced by the varying lengths of service, gender balance
and expertise of all the directors, together with the mix of skills
and experience as depicted in the chart on page 93.
The non-executive directors provide constructive challenge,
strategic guidance and specialist advice.
Ongoing Board training
As regards the continuing professional development of the
executive and non-executive directors, independent of any formal
training arranged by the Company, they are encouraged to attend
seminars and conferences on issues relevant to their appointment
as directors of a public company, particularly matters concerned
with corporate governance, ESG, audit, risk and remuneration
issues. In addition, Board site visits are considered essential to
ensure that directors have a thorough understanding of business
operations and issues that affect the Group and its workforce.
During the year, the Board and the Audit and Risk Committee
have received presentations from our legal advisers on corporate
governance and from our auditors on the 2024 UK Corporate
Governance Code.
Board independence
Having due regard to the conduct of directors, the Board
considers that each of its independent non-executive directors
standing for re-election continues to be independent in character
and judgement and there are no relationships or circumstances
which are likely to affect (or could appear to affect) the judgement
of such independent non-executive directors. The Board confirms
that the directors continue to perform effectively, that they
demonstrate commitment to their particular roles, that they ensure
proper time is devoted to Board and Committee meetings and
should therefore be re-elected at the forthcoming AGM.
The current terms of appointment of all the directors are set out in
the Directors’ Remuneration Report on page 117.
At the time of her original appointment as a director in November
2022, Kate Rock, chair, was considered independent by the Board.
Board induction
On appointment, new members of the Board take part in a tailored
induction programme, organised by the general counsel and
company secretary. There were no new directors appointed
in 2024, although during the year Steve Mogford and Amanda
Fisher continued the induction programme they began in 2023.
In particular, Amanda made further visits to some of our key
operational sites, meeting with employees and clients, learning
more about the business and important projects, and provided
feedback which will be used to tailor future induction programmes.
Costain Group PLC | Annual Report and Accounts 2024
70
BoardPerformance
The Board has a formal process for the evaluation of the
effectiveness of the Board and its Committees. The last full
internal Board Performance Review was undertaken in autumn
2022, with a review of the sub-committee structure undertaken in
2023. The formal external review scheduled in 2023 was delayed
due to the very recent appointment of Amanda Fisher and Steve
Mogford towards the end of 2023.
The Board Performance Review in 2024 was externally facilitated
by consultant Clare Chalmers, following a formal selection
process, led by Nicole Geoghegan, general counsel and
company secretary. Ms Chalmers has no other connection with
Costain, or its individual directors.
The review consisted of an initial scoping meeting with Kate Rock,
chair and Nicole Geoghegan and a review of Board and Committee
papers, minutes and agendas, the annual report, the Schedule
of Matters Reserved to the Board and the Terms of Reference of
the Board Committees. One-to-one interviews with each member
of the Board, the general counsel and company secretary, the
chief people and sustainability officer and the managing directors
of the divisions were held. The Audit and Risk Committee and
Board meetings held in August 2024 were observed. A report was
prepared, which formed the basis of a discussion at the October
Board meeting.
Overall, the report concluded that both the Board and the
business were considerably stronger than at the time of the last
external review, identifying a number of strengths, including a
capable and energetic chair, who led a collegiate, experienced
and highly skilled Board, comprised of non-executive directors
with good knowledge of the business’ markets and clients and
committed executives, with high levels of integrity and ethical
standards, as well as a strengthened risk function.
The report also identified areas for further improvement, which
the Board discussed with Clare Chalmers at the October Board
meeting. As a result of this discussion the Board agreed to
focus on the following actions during 2025. Work has already
commenced to implement some of these changes:
Succession planning Workforce Engagement Director
The Board recognised the importance of continuing to focus
on succession planning for senior leaders to ensure that such
leaders continue to support and drive the company’s strategy.
In the year the Nomination Committee reviewed succession
planning for a number of senior roles, with further reviews to
be undertaken in 2025. See pages 92 and 93 for further details.
The Board members spent time during the year meeting with
employees and the wider workforce, making visits to our
key sites, both collectively and individually. Costain has not
previously nominated a non-executive director with specific
responsibility for Board oversight of the workforce. The Board
recognised that other boards have found this a useful practice.
Accordingly, with effect from 2025, the Board has decided to
appoint Amanda Fisher as workforce engagement director to
lead the Board’s interaction with the workforce. All members
of the Board will continue to engage with employees and the
wider workforce on the bi-annual Impact Day and during any
other site visits. See pages 74, 75 and 82 for further details.
Information presented to the Board
Consistent with the objective of continuous improvement, the
Board discussed the reports and information being presented
to the Board and agreed next steps in response.
Risk Management Programme Sustainability Committee
The Board recognised the progress of the company’s risk
management programme over the past two years and suggested
that the risk registers could be refined by adding some additional
information in connection with priorities and mitigations.
See pages 50 to 55 for further details.
The long-term sustainability both of our business and our planet
is a core part of our strategy. Sustainability was recognised by
the Board as one of the key differentiators for our business.
To enable sufficient focus on this critical area, the Board has
determined to establish a Sustainability Committee. See page 66.
71Strategic ReportOverview Governance Financial Statements
Operation of the Board
The chair sets the Board’s agenda and ensures that adequate
time is available for discussion of all agenda items. To discharge
their duties, the directors are provided with full and timely access
to papers prior to Board meetings via a fully encrypted electronic
portal system. Directors have access to all information relating
to the Group and are free to seek any further information they
consider necessary. After each meeting, the general counsel
and company secretary operates a comprehensive follow-up
procedure to ensure that actions are completed as agreed by
the Board.
Senior executives and high potential employees below Board level
are invited to attend Board and Committee meetings from time to
time to deliver presentations on issues that are relevant to their
particular business sector or function (see page 64).
Between Board meetings, the chair and non-executive directors
have access to the chief executive officer, chief financial officer
and general counsel and company secretary to progress the
Company’s business. The chair and non-executive directors also
receive monthly management accounts, internal audit reports and
regular management reports and information, which enable them
to scrutinise the Group and management’s performance against
agreed objectives. The Board is also kept up to date on legal,
regulatory and governance matters by both the general counsel
and company secretary and external advisers.
The general counsel and company secretary is responsible
for ensuring that Board procedures and applicable rules and
regulations are followed. The appointment and removal of the
general counsel and company secretary is a matter reserved for
Board approval.
The Board also obtains advice from professional advisers as and
when required at the expense of the Company.
Corporate responsibility
The Board receives reports on corporate responsibility and
monitors progress on a regular basis.
Directors’ external appointments
The non-executive directors may serve on a number of other
company boards provided they continue to demonstrate the
requisite commitment to discharge their duties to the Company
effectively. Such external appointments are seen as being
beneficial to the overall decision-making process of the Board as
a whole. The Company may encourage, when appropriate, the
executive directors to take up non-executive positions, with the
prior consent of the Board, in the belief that such appointments
broaden their skills and enhance the contribution which they can
make to the Company’s performance. Generally, no more than one
such appointment may be undertaken by the executive directors.
At present neither executive director has such an appointment.
Remuneration
Details of how, in 2024, the Company has implemented the
remuneration policy approved by shareholders in 2023, together
with the activities of the Remuneration Committee during
2024, can be found on pages 95, 96 and 104 of the Directors’
Remuneration Report.
Shareholder communication and engagement
The Company remains committed to maintaining good
relationships with both institutional and private shareholders.
There continues to be regular dialogue with institutional investors
through our CEO, CFO and investor relations director, and our
chair meets with some of our largest shareholders.
Additional details of how the Company engages with shareholders
can be found on pages 74 and 75.
The chair is available to discuss strategy and governance issues
with shareholders. The senior independent director, Tony Quinlan,
is available to shareholders if they have any concerns that have
not been, or cannot be, addressed through the normal channels of
chair, chief executive officer or chief financial officer.
The Company obtains feedback from its brokers, Investec and
Panmure Liberum, on the views of institutional investors on a
non-attributed basis. The Board routinely reviews reports from
its brokers on issues relating to recent share price performance,
trading activity and institutional sentiment. The Board also
receives copies of relevant analysts’ reports on an ad hoc basis.
The AGM is an important opportunity to communicate directly with
shareholders. The AGM provides shareholders with an opportunity
to ask questions of the directors during the meeting.
At any time, shareholders may raise issues or concerns by
contacting investor relations (see contact details on page 189).
Accountability
Financialandbusinessreporting
The Board is required by the 2018 Code to present a fair, balanced
and understandable assessment of the Company’s position and
prospects and reference is made to the statement of directors’
responsibilities on page 127 together with the statement on
the status of the Company as a going concern in note 2 to
the financial statements on page 145 and the financial viability
statement on page 56.
As can be seen on page 89, the preparation of this annual report
involved input from a number of functions across the Group. The
Board was involved to enable review, challenge and discussion
ahead of approving the final content.
The Board also recognises that its responsibility to present a fair,
balanced and understandable assessment extends to interim and
other price-sensitive reports that the Company may publish from
time to time.
OtherBoardMatters
Costain Group PLC | Annual Report and Accounts 202472
Business model
The Overview and Strategic Report on pages 1 to 55 give details
of the Company’s business model.
Going concern and viability
As mentioned above, the Group’s going concern statement is
detailed in note 2 to the financial statements on page 145 and
the long-term viability statement is set out on page 56.
Risk and internal control
Riskmanagement
The Board is responsible for undertaking a robust assessment
of the principal risks facing the Group. This includes those
risks that would threaten its business model, sustainability,
future performance, solvency and liquidity and ensuring that
appropriate mitigating actions are in place to manage them.
The Group’s approach to risk management ensures that, on an
ongoing basis, the risks to the Group’s objectives are identified,
assessed and managed.
The Board and Audit and Risk Committee, as appropriate,
considered the detailed work undertaken by the risk
and assurance function to further review and define Group
risks. This included the approach to principal risk selection
and details of the underlying Group risks including mitigations,
together with contract risk assurance. These review processes
and outcomes are described in more detail on pages 50 to 55 of
the Strategic Report and in the Audit and Risk Committee Report
on pages 86 to 90.
Internalcontrol
The Board is responsible for the Group’s systems of risk
management and internal control and is required to regularly
review their effectiveness. The Audit and Risk Committee has
undertaken this review in accordance with the requirements of
the Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting, published by the Financial
Reporting Council (FRC), throughout the year and up to the date
of this annual report. Further details can be found on page 89 of
the Audit and Risk Committee Report.
The Group uses the Costain Way as the framework for the
systems and controls in place to ensure that exposure to
significant risks is managed appropriately. The Board recognises
that such a system can only manage rather than eliminate
the risk of failure to achieve business objectives and can only
provide reasonable, but not absolute, assurance against material
misstatement or loss.
The Group also has an independent internal audit function
outsourced to Forvis Mazars which undertakes a programme of
risk-based audits across our operations throughout the year.
All audit reports are shared with the relevant business owners
who are accountable for implementing appropriate measures to
address any risk or control weaknesses, together with the CEO
and CFO. The reports are also shared with the Audit and Risk
Committee and the external auditor. The Audit and Risk Committee
scrutinises the internal audit activity. Further details can be found
on page 89 of the Audit and Risk Committee Report.
73Strategic ReportOverview Governance Financial Statements
S172Statement
Engaging with our stakeholders
Our commitment
to stakeholders
We set out on page 32 our key
stakeholder groups and here
we detail how we engage with each
of them. Each stakeholder group
requires a tailored engagement
approach to foster effective
relationships. By understanding our
stakeholders and listening to their
views and feedback, we can factor
into Board discussions the potential
impact of our decisions on each
stakeholder group and consider their
needs and concerns.
The information included in the
table to the right and on pages 76
and 77 (Principal decisions), shows
how the directors have performed
their duties under Section 172 of the
Companies Act 2006, having regard
to a range of stakeholder feedback.
In response to the results of the
2023 employee engagement
survey, we targeted certain actions
including in relation to fairness and
transparency of pay. Results of the
2024 survey showed improvements
in many of these targeted areas.
Signed by the Board
10 March 2025
Workforce
• Board members took part in site visits and Q&A sessions with our people.
• We held two Company-wide leadership impact days where our people stopped
their usual activities and took part in discussions (attended by Board members).
• We conducted our regular Group-wide engagement survey.
• We designed, tested and launched our new HR system with input and feedback
from identified groups and cross function teams, and delivered tailored training
sessions.
• We rolled out a refreshed enhanced leave policy.
• We continue to work with job family owners as part of our Career Pathways
initiative which will launch in 2025.
• The chair attended a ‘Costain connected’ event at our HS2 contract with over
400 employees participating.
• Developed skills, capabilities and talent, such as with the Empower, First-Time Line
Managers, Emerging Leaders and Accelerate development programmes.
• The CEO met with 40 Costain graduates on completion of their programme.
Suppliers
Communities
and environment
• The Board is updated at each meeting with a SHE and Sustainability report and
undertook a deep dive on Costain’s climate change risk (see page 55).
• Costain took part in the Manchester Pride parade, and hosted a Party in the
Park for London Pride attended by the CEO and other members of the Executive
Board, colleagues, friends and families, demonstrating our commitment to an
inclusive workforce.
• Costain has four colleagues serving as regional board members or campaign
leadership members for BITC, and the chief people and sustainability officer is a
member of the King’s Trust Built Environment Leadership Group. The CEO became
a member of the BITC Leadership Council in 2024, in support of enhancing focus
on responsible business.
HOW WE ENGAGED
• The Board received presentations on major customers including National
Highways and HS2 to understand opportunities and challenges.
• We took our customers, such as National Highways leadership, on site visits to
flagship projects, helping to showcase our capabilities and the quality of work
across our portfolio.
• We attended strategic customer events such as the opening of Gatwick station.
• We attended a number of events with industry associations.
• Our chair met with the chair of HS2.
• Strong CEO and CFO customer engagement, for example with Heathrow, Southern
Water and Cadent.
• Our CFO attended a roundtable with the Government on sector opportunities and
challenges and actions to boost infrastructure investment and delivery.
Customers
• Kate Rock, our chair met with four significant shareholders holding a total of 27%
of the Company’s shares.
• Alex Vaughan, our CEO and Helen Willis, our CFO met with 44 investors and
potential investors including the holders of around 37% of the Company’s shares.
Meetings were held physically and virtually, both on a one-to-one and on a group
basis following the announcement of our full-year and half-year results.
• Members of the executive team met with 20 investors at investor forums, focused
on the water sector, in April and October 2024.
• Members of the Board engaged with 11 shareholders in connection with
remuneration matters and the reduction in nominal value of ordinary shares ahead
of the AGM.
Shareholders
• The Procurement and Supply Chain managers provide a crucial link with suppliers,
developing strong, enduring relationships to ensure the best solutions for our
customers.
• We have engaged with the supply chain through several channels, including SME
Academy and Meet the Buyer events providing the supply chain with insights into
Costain’s strategies, including sustainable procurement and production thinking.
• We have invested in upskilling programmes with the supply chain, utilising
resources such as Supply Chain Sustainability School as well as internal expertise
on key issues. These include Health & Safety, Carbon, Modern Slavery and
Sustainable Procurement.
• We are refining our approach to Supplier Relationship Management and working
with our projects to apply a consistent approach to engaging with our supply
chain. Our procurement teams are developing long-term relationships using
Category Management and Supplier Relationship Management as our approach.
Costain Group PLC | Annual Report and Accounts 202474
• Q&A topics include strategy, future pipeline of work, new offices, wellbeing and
internal mobility.
• Addressing some of our key risks and strategic priorities, the leadership impact
day themes were ‘wellbeing’ and ‘engagement’.
• Our engagement survey provides feedback on leadership, the Company,
managers, teams, wellbeing, personal growth, giving something back and fair
deal. In addition, we ask a series of bespoke questions about safety, culture,
advocacy, communication and career progression.
• Employee networks and forums feed into the new enhanced leave policies.
• The Your Voice forum focused on key themes: HR system, expenses and
subsistence policies, communication and other policies.
DISCUSSIONS AND ACTIONS
• We have used workforce feedback (for example from the engagement survey,
Your Voice, the employee networks and line manager briefings) to inform
our actions.
• Using feedback from the engagement surveys, we have implemented and
continue to implement targeted actions (see pages 83 to 85).
• We have introduced a Q&A session into every leadership and Board site visit.
• Employee feedback has generally been very positive to the new HR system,
with colleagues citing an improved user experience.
OUTCOMES
• We have delivered a How-to-Buy transformation programme, updating our Plant,
Material, and Subcontract Procurement processes to ensure our process are
lean and efficient and provide fairness and transparency for our supply chain.
• We have developed our sustainable procurement implementation strategy
to start rolling out through 2025. We continue to discuss actions we and our
suppliers need to take to meet our net zero carbon objective.
• We have developed clear performance reporting to ensure clarity as to supplier
performance.
• We have made it easier for our suppliers to engage with key decision makers to
ensure they are supporting the innovation in our projects. We discussed market
trends, such as materials and labour shortages.
• We have taken onboard our supply chain comments and have included
their feedback within Costain’s P&SC Transformation Plan to further improve
our engagement.
• Costain continues to rank within the top four of construction’s fastest-paying
main contractors. This attracts businesses to work with us. We submit our
statistics on prompt payment performance publicly every six months.
• Costain has been awarded the CIPS Procurement Excellence Standard from the
Chartered Institute of Procurement & Supply demonstrating our engagement
with our supply chain.
• Costain continues to support the Supply Chain Sustainability School with their
learning platform dedicated to building the skills of managers in the construction
industry to accelerate digital adoption. Several of our subject matter experts
also support shaping industry training materials.
• Our local communities have been keen to discuss construction activity,
opportunities for local businesses, job opportunities and archaeology.
• We stay connected with our local communities to inform them of any operational
impact they may experience from our work and maintain a service level
agreement for customer contact.
• Costain senior leaders took part in various BITC events including climate change,
skills and employment, wellbeing and inclusion.
• The Group’s new bank and bonding facilities agreement comprises a
sustainability-linked revolving credit facility.
• Costain’s community relations continue to be recognised by the Considerate
Constructors Scheme, averaging 46 compared to the industry average of 41
(out of 50). Every contract has an individual or team responsible for community/
stakeholder relations.
• Achieved Platinum level membership through this year’s employer audit of
The 5% Club with over 10% employees ‘earning and learning’.
• £410k social contribution made in 2024.
• We are spending more time with our customers, ensuring we are helping them
meet their changing needs, working hard to secure the new work we can shape
and ensuring that we are well placed to support them.
• Javier Echave, CFO at Heathrow Airport and chair of the Business in the
Community (BITC) Wellbeing Leadership Group, presented to the Executive
Board on the potential opportunity and organisational benefits from putting
wellbeing at the heart of business strategy.
• A senior representative from the Department for Transport presented to
the Executive Board and discussed decarbonising infrastructure, pipeline
predictability and skills strategies.
• With Southern Water leadership we discussed the challenges and opportunities
of delivering their AMP8 plan and AMP7 close-out plans.
• In an award judged by customers and peers, Costain has retained its silver
medal rating in the Financial Times UK’s Leading Management Consultants 2023
in the category Construction and Infrastructure.
• We have undertaken working groups to better support our customers with
upcoming projects.
• We refreshed our strategic business plan to take into account our customers’
changing requirements.
• The use of various engagement channels resulted in closer customer
relationships.
• We transferred learning from one sector to another through lessons
learned workshops to maximise cross-sector learning.
• We placed increased emphasis on the importance of deliverability.
• We were recognised for our activities by winning awards and accreditations.
• We talked to shareholders about trading, market developments, margin
progression, results announcements, dividends, reduction of nominal value of
ordinary shares, and the £10m share buyback in the second half of 2024.
• We engaged with investors on their enquiries relating to the water sector, HS2
developments and capital allocation.
• We addressed shareholder queries ahead of the AGM.
• The Board received an update from its financial advisers on market challenges,
the competitive landscape and any opportunities for growth.
• The AGM approved the reduction of nominal value of ordinary shares.
• During the year, our share price grew from 63.4p to 106p per share and liquidity
has increased to more than 800,000 shares traded per day from 250,000 per
day in 2022.
• Increased analyst coverage.
• Between August and November 2024, we returned £10m to shareholders
through the repurchase of 9,718,950 Ordinary Shares.
75Strategic ReportOverview Governance Financial Statements
S172Statement continued
Key area
of activity
Matters
considered Outcomes
Stakeholder
group
considered
Safety,
health and
environment
Sustainability
and climate
change
commitment
The Board monitored sustainability and environmental performance in support of the
climate change action plan. Information on how Costain has identified and addressed the
material sustainability issues that affect the Company and its stakeholders is set out in
our Sustainability Report at www.costain.com.
The Board undertook a deep dive into Costain’s climate change risk and approved
a revised net zero carbon target (see page 41 to 43).
The Board discussed establishing a Board Sustainability Committee.
Safety Each Board meeting starts with a safety moment.
The Board received a dashboard of leading indicators and a report on noted safety
incidents at each meeting.
The Board monitored progress with legal proceedings in relation to safety incidents.
Strategy Financing The Board reviewed and discussed our capital allocation policy and implemented
a £10m share buyback programme from August to November 2024.
The Board engaged with shareholders ahead of the AGM in connection with the
reduction in nominal value of ordinary shares and shareholders were substantially
supportive of the reduction.
Delivery of
strategy
The strategy, 2025 business plan and budget were approved by the Board. A strategy
day was held in July. The business plan takes into account our customers’ changing
requirements and Costain’s enhanced ways of working resulting from the transformation.
The Board reviewed in depth opportunities and risks associated with contract
terms and economic factors, procurement and supply changes, climate change and
certain contracts.
Communications
strategy
The Board has noted the significant improvement to our communication strategy in
2024, including a new intranet and a new website. These improvements have led to more
effective communications with our stakeholders both internally and externally.
Market
conditions and
trends, Company
valuation and
capital allocation
In order to assess the opportunities and risks, the Board received an update from its
financial advisers on the market, including for growth, and on financing, capital allocation
and investor considerations.
In making the following principal decisions in 2024, the Board, in accordance with Section 172(1), considered
the outcome of stakeholder engagement (as set out on pages 74 and 75), as well as the need to maintain a
reputation for high standards of business conduct and to act fairly between the members of the Company.
Principal decisions
Costain Group PLC | Annual Report and Accounts 202476
Key area
of activity
Matters
considered Outcomes
Stakeholder
group
considered
Business
and financial
performance
Trading
updates
Members of the Board, collectively and individually met with members of the senior
management and senior finance team on 23 occasions to learn more about the business,
strategy, market, culture and reporting processes.
At various times in the year, the Board agreed market announcements in relation to
trading performance.
The chair, CEO, CFO and investor relations director held various conversations with
analysts and shareholders to update them on the current position and receive their views
and feedback.
Risk
management
The Board and the Audit and Risk Committee, as appropriate, considered the detailed
work undertaken in 2024 by the risk and assurance function to further review and define
Group risk. The risk appetite framework was also reviewed in detail.
A number of risks including emerging risks were reviewed by the Board, with a deep dive
on specific risks carried out at each meeting. (For more information see pages 50 to 55,
64, 86 to 90.)
The Audit and Risk Committee received regular fraud and whistleblowing reports.
Margin The Board contemplated the impact of multiple factors on margin.
Dividends Having regard to what it considered, in good faith, to be for the benefit of its
shareholders, the Board continued paying dividends including the scrip.
Culture and
governance
Board changes The Board continued to review the balance of skills and competencies on the Board
and determined that no further changes to the Board structure was required.
The Board nominated Amanda Fisher as workplace engagement director.
Governance The Board Performance Review was externally facilitated and the report observed that
both the Board and business had strengthened since the previous review.
Progress was made in increasing the quality and transparency of information provided to
the Board through the introduction of an ‘at a glance’ chart for the Board and each of the
Committees summarising matters to be discussed at each meeting in the annual cycle.
The Board allotted shares in connection with the Company’s share plans and scrip dividend.
The effectiveness of the internal audit function and external auditor were reviewed
in detail.
The Board reviewed and approved the ESG and gender and ethnicity pay gap reports,
and the modern slavery statement.
The Board received a presentation on public limited company governance by external
legal advisers.
Internal audit reports were reviewed and progress against actions noted.
People The Board made an invitation under the SAYE Scheme with 32% take-up.
Members of the Board individually met with employees and the wider workforce on
operational site visits on 14 occasions.
The Board noted the continued improvement in engagement scores in the annual
employee engagement survey.
Workforce Customers
Communities and
environment
Shareholders Suppliers
77Strategic ReportOverview Governance Financial Statements
Gender representation at 31 December 2024
Employee representation
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (chair, SID
CEO and CFO)
Number in
executive
management
Percentage
of executive
management
Number in senior
management
Male
3 of 7 43% 2 of 4 4 of 8 50% 18 of 29
Female
4 of 7 57% 2 of 4 4 of 8 50% 11 of 29
Other categories
0 of 7 0% 0 of 4 0 of 7 0% 0 of 29
Not specified/Prefer not to say
0 of 7 0% 0 of 4 0 of 7 0% 0 of 29
Equality, diversity and inclusion
Costain is committed to maintaining a diverse Board. We recognise
that diversity at all levels of the organisation is fundamental
to effective decision-making and delivering high performance.
Costain is committed to a culture of inclusion and has an executive
team that actively champions equality, diversity and inclusion.
In 2024, a refreshed Board diversity and inclusion policy was
approved. Costain’s 2025 inclusion plan sets out how we will
deliver on our goal to have a workforce which is representative of
the communities in which we operate by 2030.
The Board remains committed to maintaining a positive position
compared to the targets set out in Listing Rules LR 6.6.6R (10),
and chooses a reference date of 31 December (see table below):
• By 2025 women to make up at least 40% of a company’s
board positions – achieved by Costain in 2017 and maintained
(with a brief dip in 2022).
• At least one of the senior Board positions (chair, senior
independent director (SID), CEO or CFO) is a woman – achieved
by Costain in 2018 and maintained, with the chair and CFO
positions currently held by women.
• At least one member of the Board is from a minority ethnic
background – due to recent Board changes, this is the first year
since 2017 that this target has not been met. Please see our
plans to address this on page 92.
Costain is supportive of the Parker Review recommendations and
has set a target for 9% of senior management to identify as being
of an ethnic minority by 2027. We report our progress annually
(see page 79).
The Board places high importance on increasing diversity in senior
management and recognises the importance of developing a
diverse leadership pipeline. For 2025, the LTIP grants will include
performance metrics relating to the diversity of the employees
forming job grades D-F (a population that comprises middle
management). Increasing our overall gender diversity is also a KPI
linked to Costain’s revolving credit facility.
Note: As at the date of this report, 10 March 2025, Board gender representation remains unchanged.
Employee bands
A–C and Executive
Board
Baseline Actual Target
31 December 2023 2024 2024 2025 2026
Female
19% 19% 22% 25% 28%
Ethnic minority
7% 8% 9% 11% 13%
BoardDiversity
Initiatives
The business is focusing on job grades D-F as part of this year’s
targets as demographic data across these grades suggest that
focusing on these grades for underrepresented groups could
unlock barriers to progression and, in turn, positively impact our
gender and ethnicity pay gaps. Our development programmes
(such as the Emerging Leaders Programme and Empower) are
currently aimed at these same job grades, enabling us to tie in
both development and recruitment efforts to make a genuine shift
in the diversity of our leadership pipeline.
In 2024 we ran the second cohort of Empower, our programme
which focuses on the progression of women in the business,
running listening circles with employees from different ethnic
backgrounds to understand different experiences of progression
and reward and the potential impacts on our ethnicity pay gaps.
As part of our journey in becoming a Disability Confident Leader,
we have also held feedback sessions with our Disability and
Wellbeing Network to better understand how to make our training
and development offerings more accessible to all.
Progress in meeting the Company’s objectives is monitored by the
Board and targets are included in the performance measures of
the Executive Board and senior management.
Our data-led approach to addressing our pay gaps uses both
quantitative and qualitative data to inform action. Our new HR
system continues to improve data accessibility and reporting
and we actively create feedback culture through our employee
networks, engagement survey and listening circles.
We are committed to continuous improvement and regularly
benchmark ourselves against external standards to identify
opportunities to become a more inclusive employer. We were
delighted to be recognised as a Times Top 50 Employer for
Gender Equality and validated as a Disability Confident Leader in
2024, as per our commitment in our 2021 Inclusion Strategy.
We continue to evolve our way of working to be best practice
by being a Stonewall Diversity Champion, a member of Working
Families, the Business Disability Forum, the Valuable 500,
a signatory of the Armed Forces Covenant, and a member
organisation of Business in the Community (BITC).
Costain Group PLC | Annual Report and Accounts 2024
78
Ethnicity representation at 31 December 2024
Employee representation
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (chair, SID
CEO and CFO)
Number in
executive
management
Percentage
of executive
management
Number in senior
management
Asian/Asian British
0 of 7 0% 0 of 4 1 of 8 13% 1 of 29
Black/African/Caribbean/Black British 0 of 7 0% 0 of 4 0 of 8 0% 0 of 29
Mixed/Multiple Ethnic Groups 0 of 7 0% 0 of 4 0 of 8 0% 0 of 29
White British or other White
(including minority-white groups)
7 of 7 100% 4 of 4 7 of 8 87% 28 of 29
Other ethnic groups, including Arab 0 of 7 0% 0 of 4 0 of 8 0% 0 of 29
Not specified/Prefer not to say 0 of 7 0% 0 of 4 0 of 8 0% 0 of 29
Note: As at the date of this report, 10 March 2025, Board ethnicity representation remains unchanged.
Collection of diversity data is by employee voluntary self-reporting through the HR system. Every employee is asked to disclose, if they
wish, their gender and ethnicity by selecting from a drop-down list of genders (Man, Woman, Non-Binary, Other and Prefer not to say)
and ethnicity (Asian, Black, Mixed, Not stated, Other, Prefer not to say and White).
Disability Confident Leader
Costain became a Disability Confident Leader in 2024,
in recognition of its commitment to fostering accessibility
within the organisation.
The Disability Confident scheme is a government initiative
helping organisations employ more disabled people, create
workplaces that are inclusive and accessible, and retain
disabled talent.
Costain was validated as a leader by the Business Disability
Forum for having a forward-thinking approach to inclusivity
and for making impactful steps to foster disability inclusion
within the organisation. We have embedded inclusivity and
accessibility into our recruitment practices by introducing
mandatory Disability Confident and Inclusive Hiring training,
as well as offering adjustments and support at every stage
of the application process.
In addition, we have established strong partnerships with
disability charities such as WorkFit and DFN Project Search
to provide work experience opportunities for young people.
Costain is also a member of several disability organisations,
including The Valuable 500 and the Hidden Disabilities
Sunflower Lanyards Scheme, to ensure integration and sharing
of industry best practices.
We have also placed an emphasis on improving digital
accessibility through the recent launch of an accessible
website, which features an AccessiBe widget that allows
users to adjust the website to their own needs and
preferences, for example for those with visual impairments
or cognitive disabilities.
Catherine Warbrick, chief people and sustainability officer
at Costain, commented: “Being recognised as a Disability
Confident Leader is a testament to the steps we’re taking
to drive progressive, inclusive change. We’re attracting and
retaining a diverse, multidisciplined pool of talent that supports
our delivery of best-in-class infrastructure solutions.”
“The industry as a whole is working to tackle accessibility
barriers but there’s always more that can be done. At Costain,
we’re committed to fostering best practices in our organisation
and throughout our supply chain. We continue to review our
digital and in-person ways of working to ensure our people can
access the necessary training and support.”
Costain has now achieved all three certification levels of
the scheme, after committing to the scheme in 2020 (Level 1)
and being named a Disability Confident Employer in 2021
(Level 2), before being recognised as a Disability Confident
Leader (Level 3).
Natalie Leister, head of practice, Business Disability Forum said:
“We were particularly impressed in the steps Costain has taken
to embed inclusivity throughout its recruitment and onboarding
processes, which will lead to more applications from disabled
candidates, whilst ensuring recruitment and onboarding
processes are barrier free. Furthermore, we commend the work
that Costain has done in the digital inclusivity and accessibility
space, from its website being developed in collaboration with
AccessiBe, through to accessible and screen reader friendly
work on job adverts.”
79Strategic ReportOverview Governance Financial Statements
Purpose,ValuesandCulture
MISSION
We shape, create and deliver
pioneering solutions that
transform the performance of
the infrastructure ecosystem
Addressing this requires a new kind of company that brings
together a unique mix of experts. As construction, consulting
and digital partners we engineer solutions to secure a more
prosperous and resilient future. Together, our people transform
the performance of the infrastructure that connects, protects and
powers people’s lives.
Everything we do is rooted in delivery and organised around our
customers, anticipating and solving their challenges across the
infrastructure ecosystem. Our 160-year heritage of pioneering
problem-solving, together with constant innovation, enables us to
deliver cleaner, more efficient solutions that will drive opportunities
and growth for our country and our customers.
To create a sustainable future through infrastructure we
collaborate more closely than ever with customers, partners,
communities and suppliers.
Together we are creating connected, sustainable infrastructure
to help people and the planet thrive.
See page 83
See pages 6, 18 and 19
See page 89
See pages 44, 78, 79 and 92
See page 90
See pages 18, 31 and 52
See page 82
See pages 78 and 79
Infrastructure is facing enormous change. There are huge opportunities to update, connect and integrate
systems, but challenges (including a growing population, climate change, and economic and environmental
resilience) are more urgent than ever.
Who we are
Recognised indicators of culture reviewed by the
Board and its Committees include:
Outputs from
engagement surveys
Health and wellbeing
performance
Whistleblowing
reports
Safety performance, initiatives
and trends, including both
leading and lagging indicators
Internal audit reports
and findings
Engagement
visits to site
Employee
networks
Progress in respect of
diversity and inclusion
including gender and
ethnicity pay gap reports
PURPOSE
Improving people’s lives
(see pages 2 and 18 to 23 for more
on purpose and purpose in action)
VISION
To create connected, sustainable
infrastructure enabling people
and the planet to thrive
Costain Group PLC | Annual Report and Accounts 202480
December 2024 marked a significant moment in our
transformation journey as we launched our new human capital
management system.
The project team successfully co-designed and implemented
a global, best in class system to:
• modernise its people processes
• improve employee experience
• ensure improved compliance
• strengthen cyber and data security.
Costain now has access to better workforce insights
to support decision making and enhanced reporting.
The roll out was supported by almost 100 HR champions, who
were instrumental in engaging our teams by delivering local
communications, offering practical peer-to-peer support and
signposting to available learning materials.
During the first month, 2,293 colleagues logged in and completed
the in-system, guided ‘Employee Welcome Experience’.
We upskilled 11 HR champions to support our line manager
population in ‘train the trainer’ roles. The network went on to
train over two thirds of line managers (c.630) on how to use
the system and focussing on the key tasks that line managers
need to perform. The in-person and virtual training sessions
took place prior to going live with the new system.
Since launching, we’ve had a great response from colleagues
accessing a range of learning materials. An HR support hub
was created on the intranet, with a variety of quick reference
guides, bitesized videos, glossary and FAQ documents to
support colleagues through the change.
The roll-out of our system will continue throughout 2025,
as extra functionality is deployed and communicated to the
business in line with our cyclical people activities.
Transforming
our people
function
81Strategic ReportOverview Governance Financial Statements
WorkforceEngagement
Board engagement
with the workforce
Engagement with and feedback from the workforce are vital to
maintaining a sustainable business and the Board received a
people report at each meeting. This is not limited to Company
employees but also includes sub-contractors and agency
workers in Costain’s extensive supply chain.
In compliance with the 2018 Code, we have adopted a workforce
engagement mechanism. For 2024 this involved direct contact
between directors and a diverse cross section of the workforce
through a range of engagement activities. Costain aims to
inspire and engage our teams, creating interactive two-way
dialogue through mechanisms such as the employee networks,
engagement surveys and the Your Voice forum. In addition, the
Board continues to use a number of recognised indicators of
culture (see page 80).
Our non-executive directors carry out engagement visits
to our projects and sites to gain further insights into the
business, such as health, safety and environmental practices
and performance, operational efficiencies and knowledge
of customer relationships.
As part of these visits a Q&A session is normally held by
the Board member with members of the site team (including
employees and representatives of the supply chain and
customers). At the end of each visit the non-executive director
provides feedback to the CEO and the general counsel and
company secretary, capturing key information and observations
from the visit. Relevant themes are then discussed at Board
meetings and appropriate actions agreed.
Two Company-wide leadership impact days were held in April
and October. These impact days bring together the whole
Company, including joint venture partners, the supply chain
and customers and focus on important safety, health and
environment issues. The April Impact Day focused on health
and wellbeing. Our chair, Kate Rock took part in this impact day
at HS2, and Amanda Fisher at the Severn Trent Water sewage
works in Redditch.
The October Impact Day focused on a healthy engagement
culture. Kate Rock joined this impact day at Southern Water
CMDP and Tony Quinlan joined at Thames Water reservoir
project in Oxfordshire.
In addition, Kate Rock, made a number of site visits during the
year to the Smart Motorway project at Chesterfield, Cadent
and Heathrow. She also joined the Costain Connected event in
October for those staff engaged in the HS2 project as part of
the SCS joint venture.
Amanda Fisher made a number of site visits during the year
to Devonport, a joint venture with Babcock, the A30 project
and Heathrow.
These visits were primarily focused on engagement with the
workforce and observing safety procedures in action.
Tony Quinlan visited the Heathrow baggage handling project
in May and Fiona MacAulay visited HS2 Mandeville Road
in November.
The site visits gave Board members the opportunity to get a
first-hand feel for how our business works from the perspective
of our employees. Feedback following these visits was
overwhelmingly positive.
At each site Board members were impressed with how deeply
consideration for safety matters was embedded across the
organisation and saw for themselves the potential dangers
inherent at some of our sites and observed how these dangers
are managed on a daily basis. Many of the sites were justifiably
proud of the good safety record on-site.
Board members also reported a strong sense of pride in the
workforce in working for Costain and noted that in some cases,
particularly at Joint Venture sites, the workforce would like to
feel even more connected to Costain, via a stronger Costain
identity on-site.
The Board also met with the wider supply chain and discussed
some of the challenges faced.
Employees reported an interest in environmental issues and were
keen to hear more about corporate environmental initiatives.
In addition, members of the senior management team complete
regular site visits. There is now a Q&A session at each of these
visits to improve workforce engagement on these site visits. The
schedule for these visits is published internally on the intranet
to enable strong workforce attendance and engagement.
Engagement visits to site
Leadership
initiatives, briefings
and blogs
Engagement
visits to site
Engagement
survey
Recognition
Employee forum –
Your Voice
Career
pathways
WORKFORCE
ENGAGEMENT
Costain Group PLC | Annual Report and Accounts 202482
75% of colleagues shared their views as part of our third annual engagement
survey, ran by Best Companies. We are delighted to achieve a Best Companies
1 Star accreditation and named a ‘Very Good Place to Work’ for the third
consecutive year.
We’ve seen a year-on-year increase of our Best Companies
Index (BCI) score, with a 20 point increase over the last year.
This is a fantastic achievement noting that Best Companies
advised that other companies experienced a 20 point decrease
on average compared to last year.
We saw increased engagement across all eight factors, with
Leadership engagement achieving the biggest increase (+7%),
and My Company and Giving Something Back increasing by
3%. This is reflective of the targeted actions we have taken
during 2024.
We’re actively working towards achieving a 2 Star accreditation
by building on the actions that have already been taken and
proven effective. We will drive further progress in 2025 by
focusing on personal growth, wellbeing and team connections.
We’ve published our Group engagment survey results and
issued divisional, sector and function results as well as sharing
data with projects and smaller teams to help teams to identify
local actions in response to their results.
The Board will continue to monitor our progress against the
actions that we are taking in 2025.
According to our people, we’re
still a ‘Very Good Place to Work’
83Strategic ReportOverview Governance Financial Statements
We’re proactively building resilience within our
FLM pipeline to make sure that Costain has the talent
that we will need to meet future demands.
In 2022, we launched our first ever Front Line Management
development programme to enhance the quality of leadership
and management, and improve diversity by reducing the age
profile within the role. The success of the FLM development
programme has been impressive – we’ve achieved an 86%
retention rate and all programme alumni have retained or
improved their talent score.
Further to this, in 2024 we launched a new Front Line
Supervisor (FLS) Gateway programme, designed to build
the foreperson pipeline, creating a tailored pathway into
supervisory positions for operatives who demonstrate
leadership skills and potential. Three Costain colleagues
and ten colleagues from our supply chain are taking part
in the pilot, which covers an introduction to leadership and
management, develops technical capabilities and provides
support through mentoring.
Listening to feedback
Building resilience in our front line management
(FLM) pipeline
WorkforceEngagement continued
We’ve listened to feedback from our teams and made
improvements to our maternity, paternity and carers
leave entitlements.
With input from our Women’s and Parenting network,
Your Voice forum and engagement survey, we increased
the length of our enhanced maternity and adoption pay
and colleagues are now eligible for enhanced maternity,
paternity and adoption from their first day of employment.
In addition, we’ve quadrupled the length of our paternity
leave, increasing from two weeks to eight weeks.
We also launched paid carers leave for the first time;
providing people with caring responsibilities five days’
paid leave per annum to look after loved ones. The new
offering was introduced in advance of the Carers Bill
coming into effect from April 2025, which introduces
five days unpaid carers leave.
Costain Group PLC | Annual Report and Accounts 202484
Planning for tomorrow’s talent, today
With a strong pipeline of work in the coming years, we’re
increasing our intake of early careers professionals (graduates,
apprentices, internships and university placements) to more
than 180 places in 2025.
Last year, we launched our ambitious early careers strategy to
make sure that we position ourselves to have the right people,
with the right skills, in the right place, at the right time.
Collaboration has been key to shaping the early careers
strategy. The Early Careers team worked closely with sector
leadership teams and job family owners to validate future
requirements and identify skills gaps and regional variances
that the strategy would need to address. In addition, the team
is building relationships with external stakeholders such as
universities, UTCS and clients to design a practical strategy
that meets Costain’s long-term goals.
The co-created strategy has been developed alongside the
business plan to make sure that we have mapped our early
career requirements against the people and skills that we need
to deliver our business plan ambitions.
In 2024 we broadened our development offering by launching
our Costain Leadership Series (CLS), a new programme that
aims to strengthen leadership capabilities. The series is aligned
with our leadership framework, which sets the standard for
successful leadership now and in the future.
Our ‘Band C’ leadership team were the first population to take
part in the programme, with 45% of Band C leaders completing
the course in 2024. The remaining 55% of Band C colleagues
will take part in the CLS in 2025.
As part of the programme, we developed a 360-degree
feedback tool to provide personal insight and to establish
a baseline for future growth and development. The sessions
also covered leading and coaching high-performing teams
and a series of bite-sized learning that covered topics such
as decision making, finance for non-finance managers and
risk management.
Developing leadership capability
Celebrating our early careers talent
We are incredibly proud of the recognition, both internally and
externally, that some of our early careers employees received
in 2024.
Oliver Hussain was named ‘Apprentice of the Year’
(Thames Water Shared Apprenticeship scheme).
Stefanie Bragg won ‘UK Project Controls Apprentice of the
Year’ at the prestigious Project Controls Expo Awards.
Ollie Joyce, and Bailey Prett won quarterly Costain Awards
for their contributions in the ‘environment and social
responsibility’ and ‘safety and wellbeing’ categories, great
examples of our values and behaviours in action.
85Strategic ReportOverview Governance Financial Statements
AuditandRiskCommitteeReport
The Committee operates at a
high standard with a good level
of debate and challenge.
Meetings held
4
Committee members Attendance
Tony Quinlan 100%
Amanda Fisher 100%
Fiona MacAulay 100%
Steve Mogford 100%
“ On behalf of the Board, I am
pleased to present my report
as chair of the Audit and Risk
Committee, which describes
how the Committee carried out
its responsibilities during the
year. This year the Committee
continued its focus on key
contract judgements, and
on risk management and
internal controls.”
Tony Quinlan
Committee Chair
Costain Group PLC | Annual Report and Accounts 202486
Governance of the Committee
I have been chair of the Audit and Risk Committee, (the
Committee), which is comprised of independent non-executive
directors, since May 2021. The members of the Committee and
details of their attendance at Committee meetings are shown
opposite and on page 70 and their biographies are shown on
pages 58 and 59. The general counsel and company secretary
is secretary to the Committee.
The Board considers that I possess the necessary recent and
relevant financial experience to effectively chair the Committee
and am competent in accounting and auditing. In addition,
the Committee as a whole possesses relevant skills and
competence and sector knowledge to meaningfully discharge
the responsibilities of the Committee.
The meetings of the Committee in 2024 were attended by the
Group chair, the chief executive officer, the chief financial officer,
the lead internal audit partner and another senior representative
from Forvis Mazars (the Group’s internal auditor), the risk and
assurance director, the Group director of finance and the
external auditor. Other senior executives attend as required
to provide information on matters being discussed which fall
within their remit. In 2024, the Committee met privately, with
no management present, with the external auditor and the lead
internal audit partner immediately after each Committee meeting.
The Committee met four times during 2024.
This report sets out primary areas of the Committee’s focus
in 2024.
In accordance with its terms of reference and in compliance
with the 2018 Code, on behalf of the whole Board, in 2024
the Committee:
• monitored the integrity of the Group’s financial statements and
formal announcements relating to the Group’s performance, and
reviewed significant financial judgements contained in them,
having also received reports from the external auditor on the
outcome of its audit and review
• provided advice on whether the annual report, taken as a
whole, was fair, balanced and understandable, and provided the
information necessary for investors to assess the Company’s
position and performance, business model and strategy
• reviewed the Company’s internal financial controls and internal
control and risk management systems, and the processes for
management of the principal risks facing the Group
• monitored and reviewed the effectiveness of the internal
audit function
• reviewed the effectiveness of the external audit process
and made recommendations to the Board in relation to the
reappointment and remuneration of the external auditor, and
noted the upcoming retirement and succession of Andrew
Paynter as audit partner following the conclusion of the 2024
audit
• ensured that an appropriate relationship between the Group
and the external auditor was maintained, and reviewed non-
audit services and fees and the external auditor’s independence
• reviewed its terms of reference and determined that no
changes were required in 2024 but noted that the terms of
reference would be further considered in early 2025 in light of
the changes introduced by the Corporate Governance Code
2024 relating to controls, which will become effective for
financial years commencing on or after 1 January 2026.
In addition, the Committee also spent time on the following:
Provisions
The Committee reviewed the significant judgements relating to
provisions, including rectification provisions, fire safety compliance
claims, litigation and other risks. The Committee received detailed
reports including relevant legal advice.
Materiality
The Committee considered the auditor’s year-end materiality
benchmark. PricewaterhouseCoopers LLP (PwC) set this at £5.5m
taking into account the sector and nature of the Company’s
contracting activities.
Pensions
As reported last year, Costain announced an agreement with
the trustees of the Company’s defined benefit pension scheme.
This new contribution plan specified that if the pension scheme
was in surplus of 101% or more, on a Technical Provisions basis,
at the annual funding assessment date, contributions not be
required for the following 1 July to 30 June. The funding level
was over 101% at the last assessment, therefore contributions to
the scheme ceased on 1 July 2024. In the event that the funding
levels fall below 101% at the next assessment, contributions would
resume at the agreed new level. More specific details of the
agreement, including the ‘dividend parity’ arrangement, are set out
in note 21 on page 178.
In 2024, after a thorough selection process, the management of
the Company’s defined benefit pension scheme transitioned to a
professional sole trustee. Dalriada Trustees Limited (appointed on
23 October 2024). We would like to thank the previous trustees for
their time and dedication.
Riskmanagement
During 2024, the Committee reviewed the risk management
process and controls system and concluded they were effective,
noting the enhancements made since the previous review.
The Committee also reviewed the Group’s principal risks (including
emerging risks) and the risk management framework (see pages
50 to 55).
The Board received deep-dive presentations from management
on individual principal risks during the year. These presentations
identify controls, mitigating actions and action owners. In 2024,
these Board risk presentations focused on: safety, health and
environment; managing our contracts and economic factors;
procurement and supply chain performance; and climate change
and sustainability. The Board also confirmed its risk appetite and
reviewed emerging risks.
The Committee discussed internal audit findings on fraud risk
management and the whistleblowing process and reviewed
regular whistleblowing updates.
87Strategic ReportOverview Governance Financial Statements
AuditandRiskCommitteeReport continued
Significant accounting matters
The Committee, or the Board where scheduling of meetings was
more suited, spent a substantial amount of time considering key
accounting issues, matters and judgements in relation to the
Group’s financial statements and disclosures relating to:
(A) Material contract judgements
As detailed in note 2 on pages 152 to 153 of the financial
statements, a significant proportion of the Group’s activities
is undertaken via long-term contracts. These contracts are
accounted for in accordance with IFRS 15, Revenue from
Contracts with Customers, which requires that revenue is only
recognised when it is considered highly probable not to reverse.
Management uses detailed contract valuations and cost forecasts
when formulating its judgements of costs and revenues and
its assessments of the expected outcome of each long-term
contractual obligation. Given the Group’s portfolio of contracts,
the Committee spent considerable time during the year reviewing
the positions and judgements taken by management on a
number of material contracts. As a result of its review and having
discussed this area in detail with management and with the
external auditor, the Committee concluded the accounting position
taken in the Group’s long-term contracts was appropriate.
(B) Pension
The Group’s defined benefit pension scheme requires significant
judgements to be made in relation to the assumptions for
inflation, future pension increases, discount rate and member
longevity, which underpin the valuation. Each year, in selecting the
appropriate assumptions, the Company takes written advice from
an independent qualified actuary. The Committee has critically
reviewed these assumptions and considers them to be reasonable.
These assumptions and sensitivities are set out in note 21 on
pages 176 to 178 of the financial statements.
(C) The carrying value of goodwill
As set out in note 12 on page 163 of the financial statements,
the Group’s statement of financial position includes goodwill of
£45.1m, which is allocated across both the Natural Resources and
Transportation segments, and is subject to an annual impairment
assessment. The Committee focused on the carrying value of
goodwill within each segment and critically reviewed the key
assumptions in relation to forecast operating margin, the discount
rate and long-term growth rates. The Committee agreed with
management’s assessment that no impairment was required and
that there was no reasonable possible change in assumptions that
would give rise to an impairment.
(D) Going concern and viability statement
The Committee considered the requirements of the 2018 Code as
it applies to the Group’s viability statement including the three-
year period of assessment which aligns with the Group’s planning
horizon and the processes supporting the viability statement. The
Committee considered the various scenarios that were presented
as part of the viability assessment, which included a reverse stress
test, mitigations and severe but plausible scenario analysis relating
to the Group’s principal risks.
The Committee assessed the appropriateness of the downside
scenarios and determined that there was sufficient headroom
to agree with the Board’s confirmation that the Group has a
reasonable expectation to continue in operation and meet its
liabilities as they fall due over the viability period. Alongside
the liquidity and debt positions of the business, the Committee
determined that the three-year measurement period continued
to be appropriate and that the viability statement (see page 56)
should be recommended to the Board for approval. Please see
note 2 on page 145 of the financial statements for going concern
information.
(E) Adjusting items
As set out in notes 2 and 3 of the financial statements from pages
144 to 155 management has used judgement to determine the
items classified as adjusting items. The Committee has robustly
reviewed and challenged each of the adjusting items, including
as to the details of each item and whether they were genuinely
exceptional, and discussed these with the Company’s external
auditor to inform the judgement.
(F) Accounting and other regulatory
developments
There are no significant changes to the Group’s accounting
policies in 2024.
The Company reports under Financial Reporting Standard 101
‘Reduced Disclosure Framework’, permitting certain disclosure
exemptions in this annual report (see note 2 on page 144).
There are no other new standards in 2024, only amendments to
existing standards (as disclosed in note 2). These amendments did
not have any impact on the amounts recognised in prior or current
periods and are not expected to materially affect future periods.
Costain Group PLC | Annual Report and Accounts 2024
88
Fair, balanced and understandable
The process to ensure the Group’s financial statements, taken
as a whole, are fair, balanced and understandable is:
• comprehensive guidance issued to all contributors
• verification process dealing with the factual content
of the report
• review of the disclosure judgements made by the contributors
from various functions
• comprehensive reviews undertaken to ensure consistency
and overall balance
• review undertaken by the Committee prior to recommendation
to the Board.
Audit, risk and internal control
The Board assumes ultimate responsibility for the effective
management of risk across the Group. However, the Committee
supports the Board in its monitoring of the Group’s internal
financial controls and internal control and risk management
systems, and monitoring and reviewing the work of the internal
audit and risk functions.
Internal audit
The internal audit and risk functions have an integral role in
the Company’s governance structure, providing independent
assurance and advice to help the Group achieve its strategic
priorities. The Committee agreed the 2024 audit plan to be
undertaken by the internal audit team and assessed the
adequacy of the budget and resources.
The audit plan is based on risk, strategic priorities and
consideration of the control environment. Progress against the
plan is monitored. The Committee reviews the results of the
internal audit reports at each meeting.
Management is responsible for closing out actions to address
issues raised by internal audit within the agreed timetable and the
timely completion of such actions is reviewed by the Committee.
Where internal or external circumstances give rise to an increased
level of risk, the audit plan will be modified accordingly during the
year, if appropriate.
The lead internal audit partner from Forvis Mazars reports to
the CFO and has a direct relationship with the Committee chair
with whom he has regular briefings without management present.
The CFO line manages the risk and assurance director, who also
has a direct relationship with the Committee chair.
At the December meeting, the Committee received a report from
Forvis Mazars which covered progress against the 2024 audit
plan together with the reasons certain audits had been paused
or reprioritised, the status of management actions in response
to audit findings and the proposed content of the 2025 audit plan,
which was approved by the Committee.
The effectiveness of internal audit is assessed by the
Committee by:
• reviewing the results of an annual questionnaire completed by
individuals who have exposure to and contact with the internal
audit function
• evaluating internal audit reports
• meetings with the chair of the Committee and with the
Committee without management present.
The 2024 review concluded positive progress had been made
during the year with a constructive relationship with management
and production of audit reports of a high standard, with such
reports benefitting from Forvis Mazars’ independent perspective.
Areas for further focus have been identified such as: improving
communications on planning, execution and findings of audits;
improving clarity on areas of focus earlier in the process;
increasing the visibility of the internal audit function across the
Company; and making subject matter experts available to assist
with deeper dives in specific areas.
The Committee is satisfied the function is competent to deliver the
2025 internal audit plan.
Internal control and risk
Details of the Group’s internal control and risk management
framework are more fully set out on pages 50 to 55 in the
Strategic Report and on pages 67 and 73 in the Governance
Report.
The Group’s principal risks are set out on pages 52 to 55.
The Committee has evaluated the effectiveness of the systems
operated within the Group pursuant to the FRC’s guidance on
internal control. The evaluation covered all material controls. They
encompassed a review of: the management confirmation reports
submitted by all senior management; assurance results; reports on
malfeasance allegations; the Group’s approach to anti-bribery and
corruption, and whistleblowing; and reports from both the internal
and external auditors.
The review did not identify any significant weaknesses in the
system of internal control and risk management.
Improvements introduced in 2024 were as follows:
• Process and technical controls of commissioning were
strengthened.
• A focussed campaign on Building Safety Act and fire
engineering/construction fire safety was delivered.
• Focus on construction compliance and safety was maintained
and new guidance introduced on rebar stability and safe lifting
practices and excavation.
• In-house engineering team strengthened.
• IFRS compliant site work defect/rework system rolled out
to ensure reporting compliance and to strengthen data on
construction stage rework supporting future risk reduction.
89Strategic ReportOverview Governance Financial Statements
AuditandRiskCommitteeReport continued
External auditor
The Company’s external auditor is PwC. After a competitive
tender process in 2016, PwC were appointed as auditor from
the 2017 audit. Andrew Paynter has been our audit partner since
the 2021 audit and will be retiring at the conclusion of the 2024
audit. I should like to record our thanks to him for supporting the
Company for the past four years, whilst providing robust and
effective challenge. Chris Richmond will succeed Andrew Paynter
as audit partner in 2025.
Any issues in relation to the financial statements have been
communicated to the Committee by the Auditor and addressed.
There were no interactions with the FRC’s Corporate Reporting
Review team or Audit Quality Review team in the year.
Effectiveness of the external audit process
During the year, the Committee considered the effectiveness
of PwC as external auditor. As part of this process, external audit
effectiveness questionnaires were completed by members of
the Committee, the executive directors, other members of the
Executive Board and certain members of the finance and risk
functions. As part of this evaluation, the committee considered
the robustness of the audit process and the quality of delivery,
reporting, people and service. Based on the responses to the
questionnaires, the general counsel and company secretary
produced a report for consideration by the Committee. The
Committee confirmed that it remained satisfied with the efficiency
and effectiveness of the external audit in respect of the year
ended 31 December 2024. It was noted there was strong
cooperation between PwC and Costain and that both PwC and
Costain were committed to bringing continuous improvement to
the process.
At its meeting in December 2024, the Committee considered and
approved the external audit plan for the audit of the Group for
the year ended 31 December 2024. The Committee considered
significant risk areas for the audit, the proposed scope and
the materiality threshold. Twelve subsidiary companies sought
exemption from audit for 2024 as permitted under the relevant
regulations, thereby improving Costain’s efficiency.
Auditor independence and objectivity
Auditor independence and objectivity are an essential part of
the audit framework and the assurance it provides. The auditor’s
independence is therefore monitored throughout the year.
For example, the Committee has reviewed PwC’s own policies and
procedures for safeguarding its objectivity and independence and
the arrangements that PwC has in place to identify, report and
manage conflicts of interest. PwC is required to rotate the lead
audit partner every five years to ensure a fresh outlook without
sacrificing institutional knowledge. Andrew Paynter became lead
audit partner effective for the 2021 audit and will be stepping
down following the 2024 audit on his retirement.
The Committee is not aware of any relationships between the
external auditor, the Company or members of the Committee,
that bear on the external auditor’s integrity, independence and
objectivity. The Committee reviews all services being provided
by the external auditor annually to assess its independence and
objectivity. The Committee takes into consideration relevant
performance and regulatory requirements to ensure these are
not impaired by the provision of permissible non-audit services
(see below).
The Committee believes the independence and objectivity of PwC
and the effectiveness of the audit process remains strong and
has therefore recommended the reappointment of PwC for 2025.
Non-audit fees
During the year, the Committee reviewed the policy on
the provision of non-audit services by the external auditor
(which, as above, ensures that such services do not impair
the independence or objectivity of the external auditor) and
determined that no changes were required to the policy originally
adopted in 2021 and reviewed annually. The policy sets out a
number of key principles that underpin the provision of non-audit
services by the external auditor: the external auditor should not
audit its own firm’s work; make management decisions for the
Group; have a mutuality of financial interest with the Group; or be
put in the role of advocate for the Group.
In 2024, the value of non-audit work performed by PwC for the
Group was less than £0.1m (2023: less than £0.1m) other than
in relation to the review of the half-year financial statements.
Whistleblowing and counter-fraud/integrity
Costain’s internal fraud and ethics lead continues the valuable
work of whistleblowing investigation, promoting Costain’s
‘integrity’ value and mitigating risk of malfeasance.
All new staff across the Company are required, as part of their
onboarding process, to complete a module which identifies the
importance of acting with integrity at all times and includes details
of the Company’s whistleblowing line provided by an independent
third party. During 2024, all staff were required to complete
the annual ‘Code of Conduct’ training, which included modules
on the responsibility of all employees to call out wrongdoing
and the Company’s gifts and hospitality policy. For 2024, the
communication cascade of the Code of Conduct training includes
a video from the chief executive officer as to the importance
of the training.
During 2024, the Committee received six-monthly reports on
the nature and number of referrals to the whistleblowing line,
the outcomes of the resulting investigations and any process
improvements that were recommended, and also the work done to
further improve the Company’s fraud risk management framework.
There were 51 whistleblowing reports in 2024, some of which
related to the same allegation. These reports were made via the
whistleblowing line or referred directly to the Company’s fraud
and ethics lead.
Committee Performance Review
As described on page 71, the Board Performance Review was
externally facilitated. The review concluded that the Committee
operated at a high standard with a good level of debate and
challenge and was led by an experienced and capable chair.
It was well supported by both the external and internal audit
teams. It was also noted that, whilst the quality of information
submitted to the Committee had improved, the Committee papers
tended to be very detailed and could benefit from simplification.
This feedback is being actioned as part of the Board Effectiveness
actions described on page 71.
Tony Quinlan
Committee Chair
10 March 2025
Costain Group PLC | Annual Report and Accounts 2024
90
NominationCommitteeReport
The Committee recommended
to the Board the nomination
of a workforce engagement
director.
Meetings held
2
Committee members Attendance
Kate Rock 100%
Bishoy Azmy
1
0%
Amanda Fisher 100%
Fiona MacAulay 100%
Steve Mogford 100%
Tony Quinlan 100%
1 Bishoy Azmy was the designated representative director of ASGC Construction L.L.C, Costain’s largest shareholder
until 13 September 2024. Mr Azmy stepped down from the Board on 31 March 2024. Mr Azmy appointed Kate Teh as
his representative and she attended the March meeting of the Committee (see page 70 for more information).
The composition of our Board and Executive Board can be found on pages 58 and 59, and 60 and 61 respectively of this
annual report.
“ On behalf of the Board, I am pleased
to present my report as chair of
the Nomination Committee, which
describes how the Committee carried
out its responsibilities during the year.
Following the Board changes the
previous year, in 2024, the Committee
focused on executive succession
planning and ensuring that the Board
is operating effectively to support the
Company and enhance its performance.”
Kate Rock
Committee Chair
91Strategic ReportOverview Governance Financial Statements
NominationCommitteeReport continued
Governance of the Committee
The Nomination Committee (the Committee) is comprised of
myself as chair together with the other non-executive directors.
The members of the Committee, together with their biographies,
are shown on pages 58 and 59 and details of their attendance
at Committee meetings is shown pages 72 and 91. The general
counsel and company secretary is secretary to the Committee.
The Committee met twice in 2024.
Only members of the Committee have the right to
attend Committee meetings. Other individuals, such as the
chief executive officer, chief financial officer, chief people and
sustainability officer, members of senior management and
external advisers may be invited to attend meetings as and
when appropriate.
The outcome of all Committee meetings is reported to the Board
for its consideration. The Committee may take independent
professional advice on any matters covered by its terms of
reference at the Company’s expense.
Role of the Committee
In accordance with its terms of reference, which remain
unchanged following a review in December 2024 (see page 66),
and in compliance with the 2018 and 2024 Codes, the Committee
is responsible for:
• reviewing the overall size, structure and composition of
the Board
• identifying and nominating candidates, for the Board’s approval,
to fill Board vacancies as and when they arise
• receiving notifications from directors of situations, such as
proposed external appointments, in which a potential conflict of
interest might arise and/or their time commitment to the Board
could be compromised
• recommending to the Board the reappointment of those
directors who are offering themselves for re-election at the
Annual General Meeting following due consideration of the
Board’s policy on independence and the results of periodic
Board performance reviews
• formulating plans for succession for both the executive
directors and non-executive directors
• reviewing succession planning arrangements and development
plans for other senior employees
• reviewing periodically the effectiveness of the Committee’s
own performance, which forms part of the regular evaluation
and development work conducted by the Board to ensure
it continues to improve its overall effectiveness.
Board diversity
The Company recognises the importance of diversity at the
Board and all levels of the Group. The diversity and inclusion
policy adopted in December 2023 and refreshed in December
2024 applies to the Board and its Committees and covers broad
diversity aspects such as sexual orientation, disability and
socio-economic background.
During the year, Bishoy Azmy, who had served on the Board
for four years as the designated Board representative of ASGC,
the Company’s largest shareholder, stepped down from the
Board. Following this, the Board is entirely composed of directors
of white ethnicity. In considering future Board appointments, the
Board will seek to ensure that a diverse slate of candidates is
considered for each position. Appointments will continue to be
made on business merit, but taking account of the importance
of having diverse perspectives on the Board.
Further details of the work undertaken to support the
development of a diverse pipeline, our measurable objectives that
have been set for implementing the policy, and progress made in
achieving these objectives, can be found on pages 78 and 79 .
Over the last few years, we have increased the diversity of our
workforce, reduced our gender pay gap and created a more
inclusive environment. However, while progress has been made
and strengths recognised, there continues to be a lack of ethnic
diversity in Costain senior leadership roles, together with lower
levels of diversity in contract leadership roles. This is a trend
reflected across the industry. However, across the total workforce,
our diversity is improving. The limited diversity within the talent
pools identified for senior management succession emphasises
the need for our continued focus on our equality, diversity and
inclusion (EDI) targets and ambition, and why we have decided
to extend the EDI targets in our 2024 LTIP to a wider leadership
population (see page 113 of the Directors’ Remuneration Report).
By appreciating and celebrating our differences, we are creating a
more dynamic and inspiring workplace for our employees thereby
supporting the long-term performance of the Company. We work
hard to ensure our workforce reflects the diverse communities
we serve, and that we create an inclusive culture where each
employee can truly thrive and perform at their best at work.
Embracing diversity underpins our commitment to providing equal
opportunities to our current and potential employees and applying
fair and equitable employment practices.
For more information on our ethnicity and gender pay gaps, please
see pages 44 and 45 and our separate integrated gender and
ethnicity pay gap report at www.costain.com.
Following changes in the year, female representation at Board
level has increased to 57% and the representation of ethnic
minorities has decreased to 0%.
Our principles on Board diversity also apply to the Executive
Board and currently 50% (four of eight) of our Executive Board
are female and 12.5% (one of eight) of our Executive Board is
of non-white ethnicity.
Committee Performance Review
An externally facilitated Board Effectiveness Review was
undertaken during 2024 and is described in further detail on pages
63 and 71. This review emphasised the importance of focusing
on executive succession planning not only for the CEO and CFO
roles, but also for the wider executive team. In December, the
Committee discussed succession plans for various executive roles
considering both long-term and emergency succession planning.
The Board Performance Review also recommended the
appointment of one of the non-executive directors as workforce
engagement director and the establishment of a Sustainability
Committee. See pages 66, 71 and 93.
Activities in 2024
Following the appointment of Amanda Fisher and Steve Mogford
at the end of 2023, there have been no additional Board
appointments during 2024. Bishoy Azmy stepped down as
non-executive director on 31 March 2024.
Costain Group PLC | Annual Report and Accounts 2024
92
The Committee’s work during the year has therefore focused
on Executive Board composition, succession and development,
ensuring we have the right balance of skills, experience and
diversity at the most senior level of our business. During the
year, the Executive Board was strengthened by the appointment
of Jonathan Willcock as managing director, Transportation
in April 2024 and the appointment of Paul Morris as Group
commercial director in July 2024. The Committee has also
considered succession plans for the roles of CEO and CFO
as well as the wider executive team.
The Committee has also considered and discussed some of
the recommendations from the externally facilitated Board
Performance Review relating to the nomination of a workforce
engagement director (to lead the Board in our engagement with
employees and the wider workforce) and the establishment of
a Sustainability Committee (to provide strategic direction and
oversight in relation to sustainability matters). Since the year
end, the Committee and Board have named Amanda Fisher as
workforce engagement director.
Directors
At the 2024 and 2025 AGMs, all our directors in post at the time
stood or are standing for election or re-election, as required by
the 2018 and 2024 Codes.
The Committee considered all Board members’ other
appointments and commitments and the impact on their time
availability in view of general investor concerns regarding
overboarding. All new external appointments have been approved
by the Board, as required under the 2018 Code, as have any actual
or potential conflicts of interest.
For example, in 2024, Steve Mogford advised the Committee that
he had been offered an additional role as non-executive director
of Intertek plc and Fiona MacAulay advised that she had been
asked to take the role of senior independent director at Chemring
plc (in addition to her role as non-executive director).
The Committee considered the nature of both these roles and
the time commitment required and determined they would
not represent a conflict of interest nor impact the amount
of time Mr Mogford and Ms MacAulay could devote to their
roles at Costain and therefore concluded that these additional
appointments be approved.
The Committee reviews the balance of skills on the Board on
an annual basis and each director self-assesses their level of
expertise against each category determined as important by the
Committee as summarised in the table above. The Committee,
on behalf of the Board, is satisfied that Board members have
sufficient time, knowledge and commitment to discharge their
roles at Costain effectively. This has been evidenced during the
past year when Board members have again contributed fully
and effectively.
Appointment of directors
There were no Board changes in 2024, other than the retirement
of Bishoy Azmy. The Nomination Committee has reviewed the
Board skills matrix above and has determined that there is currently
a good balance on the Board of the skills required by this Board.
In the event that a need for additional directors arises, the
Committee will follow a rigorous and transparent process working
with an external search partner to scope the role and ensure that
a diverse slate of candidates is considered. Shortlisted candidates
will be interviewed by the chair, senior independent director and
other Board members and considered by the Committee prior
to making a recommendation to the Board for appointment.
Kate Rock
Committee Chair
10 March 2025
6
Sector knowledge –
Transportation – Road
5
ESG – Sustainability
3
3
4
4
3
6
7
Sector knowledge –
Transportation – Rail
Sector knowledge – Natural
Resources – Water
Sector knowledge – Natural
Resources – Energy
Sector knowledge – Natural
Resources – Defence and Nuclear
Strategy/M&A
Technology/Digital
3Communications/Marketing
Risk Management
6
Construction/Engineering/
Complex delivery
4
Consultancy
5
Long-term contracting
4
Finance/Audit/Banking
7General management
7
People – culture, EDI, succession,
talent, reward
4
Government/Political relations
5
5
Health & Safety
Investor relations
6
PLC – corporate governance
Skills and competencies (all 7 directors*)
* Self-assessment based on strong or very strong experience.
93Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport
Strong performance
across financial, health,
safety and environmental
measures.
Meetings held
3
Committee members Attendance
Fiona MacAulay 100%
Amanda Fisher 100%
Steve Mogford 100%
Tony Quinlan 100%
“ Our remuneration policy is
designed to be simple and
transparent, aligned with
delivering our strategy to
transform the Group, and
ultimately supporting the
creation of long term sustainable
shareholder value. We always
consider the wider workforce,
our shareholders and other
stakeholders by taking a fair,
prudent and balanced approach
to remuneration.”
Fiona MacAulay
Chair of the Remuneration Committee
Costain Group PLC | Annual Report and Accounts 202494
Remuneration at a Glance
Directors’RemunerationReport
Actual remuneration of our executive directors for 2024
and application of policy for 2025
CEO – Alex Vaughan CFO – Helen Willis
Base salaries
Pension
10% of salary in line with wider workforce 10% of salary in line with wider workforce
AIP – maximum opportunity
2024: 150% of salary
2025: 150% of salary
2024: 150% of salary
2025: 150% of salary
LTIP – maximum opportunity
2024: 100% of salary
2025: 100% of salary
2024: 100% of salary
2025: 100% of salary
Single figure total for 2024 £2,443,512 £2,038,632
2024 £515,700
2025 £536,328
2024 £428,300
2025 £443,291
How was our performance reflected in executive director pay for 2024?
AIP – Award earned by executive directors for 2024
Adjusted
operating profit
1
(max opportunity:
40%)
Profit secured
for 2025
(max opportunity:
15%)
Cash flow
2
(max opportunity:
15%)
Safety, health
and environment
(max opportunity:
10%)
Personal
performance
(max opportunity:
20%)
Total achieved
(% max)
Actual pay-out
(% of salary)
3
Alex Vaughan 33% 15% 11% 10% 20% 89% 133.5%
Helen Willis 33% 15% 11% 10% 20% 89% 133.5%
1 See definition on page 148. Target underpinned by 90% cash conversion.
2 Measured as average month-end cash balances, pre-acquisition and investments.
3 33% of the value of the AIP award for 2024 will be deferred into shares under the Share Deferral Plan (SDP).
LTIP – Award vesting for performance over the three years ending 31 December 2024
Aggregate adjusted EPS
4
for financial years ended
31 December 2022, 2023 and 2024 (two thirds of the award)
Cash conversion
(one third of the award) Total Achieved
Alex Vaughan
34.7 pence
(maximum vesting level: 33.7p or more)
137%
(maximum vesting level 100% average
cash conversion)
100%
5
Helen Willis
Ensuring shareholder alignment
33% of AIP bonus is
automatically deferred into
Costain shares with a
two-year holding period.
Subject to performance
targets being met, LTIP
shares vest after three
years but will only be
released after five years.
Share Ownership Guidelines are set at 200%
of salary for the executive directors.
Progress toward holding requirement
Balance of 200% holding requirement
Alex Vaughan
87.5% 12.5%
143%
Helen Willis
4 Measured as adjusted basic earnings per share (see definition on page 148), further adjusted to exclude pension scheme interest.
5 The awards vest in April 2025 but are subject to a two-year holding period following the end of the performance period.
95Strategic ReportOverview Governance Financial Statements
Alignment of our Remuneration Policy with our strategy
People
Executive directors’ role specific
objectives under the AIP are linked
to talent development, succession
and progressing the Group’s
inclusion strategy.
Planet
We hold ourselves accountable
to the highest safety, health and
environment standards and are
committed to operating sustainably,
ethically and inclusively.
Performance
Our core financial and strategic
objectives, critical to the success of
our long-term strategy, are largely
embedded within the executive
remuneration framework through
the AIP and LTIP.
40% Adjusted operating profit with
90% cash conversion
15% Profit secured for 2026
15% Cash flow
10% Safety, health & environment
20% Personal performance
AIP performance metrics – 2025
50% EPS
25% Absolute TSR
15% Environmental: Reduction in
water pollution incident rate
10% Social: Gender and ethnic
diversity
LTIP performance metrics – 2025
Directors’RemunerationReport continued
Wider workforce
We are committed
to paying the real
living wage to
all employees.
All employee share
plan – 32% take-up
of eligible employees
under the SAYE Plan.
Achieved Best Companies 1-Star status for the
third consecutive year – a ‘Very Good Company
to Work For’ with 95% of employees agreeing
that health and safety is taken seriously and 84%
of employees agreeing that their line manager
exhibits the Costain behaviours (see page 83 in the
Governance Report for more information).
The annual salary
review budget for
April 2025 will be
3.5%, allocated based
on performance
and position in
salary range.
Percentage of females in senior management
positions: 38% at 31 December 2024 (see page 78).
We achieved our 2024 target to become an
accredited Disability Confident Leader (level 3).
In our wider leadership community, 8% of
colleagues are BAME (Target: 9%) and 19%
female (Target 22%).
324 people were
promoted in 2024.
752 people
transferred roles
in 2024.
Costain Group PLC | Annual Report and Accounts 202496
I am pleased to present our Directors’ Remuneration Report for the year ended 31 December 2024. Our report explains the work of the
Committee and how we have implemented our remuneration policy. A summary of how the pay for our executive directors is aligned with
delivering our strategy and our performance in 2024 is shown in the ‘Remuneration at a Glance’ section on pages 95 and 96.
The annual report on Remuneration (on pages 104 to 120) describes how the policy has been applied for the period ended 31 December
2024, and how we intend to implement the policy for the 2025 financial period and is subject to an advisory vote at the 2025 AGM.
2024 remuneration in the context of our business performance and outcomes for our key stakeholders
The Committee has as usual considered executive remuneration in the light of outcomes for the wider workforce, our shareholders and
other stakeholders by taking a fair, prudent and balanced approach to remuneration.
• Our revenue performance in 2024 reflects continued growth in Natural Resources (including Defence and Nuclear Energy).
• Increased adjusted operating profit has been driven mainly by improved performance in Transportation resulting from a better margin mix.
• Strong adjusted free cash flow reflects increased operating cash flow and financial income, together with positive working capital
movements in FY24, resulting in a FY24 net cash position to £158.5m (FY23: £164.4m).
• Following the resumption of dividends in 2023, a dividend of 0.8p per share was paid in May 2024, with the Board approving an interim
dividend of 0.4p per share paid in October 2024 and a final dividend of 2.0p per share to be paid in May 2025.
• The Company returned a further £10m of value to shareholders in 2024 via its buyback programme.
• We have had strong positive safety and health performance during 2024, evidenced by a decrease in our LTIR rate. Our LTIR rate for
the year was 0.11 (FY23: 0.12).
• Testament to the steps we have taken to drive progressive, inclusive change, Costain has been recognised as a Disability Confident
Leader and in June, we were listed as one of the Times Top 50 Employers for Gender Equality 2024.
• We continue to drive towards our goal to achieve Net Zero greenhouse gas emissions by 2045 with progress during the year including
implementing a new carbon data tool that will fundamentally improve how data is collected across all emission scopes, including
Scope 3 emissions.
• The all-employee pay rise for 2024 was 4% (excluding promotions, the graduate half-year review and the structured increases for our
apprentices). Increases were targeted to provide meaningful awards with a focus on delivering higher increases to those identified
as being paid below market and high performers. Our latest all-employee engagement survey showed high levels of engagement and
an increased Best Companies Index score.
Executive director base salary increases and variable pay outcomes for the year ended 31 December 2024
We explained in the 2023 Directors’ Remuneration Report that Alex Vaughan’s salary was positioned at the lower end of the market
compared to similar sized companies and sector peers and did not reflect his strong performance. A review of executive director
salaries in 2023 confirmed that the salary remained significantly below the market competitive rate. Therefore, and as reported last
year, Alex Vaughan received a salary increase of 10% in 2024, the first phase of a stepped increase implemented to ensure his salary is
reflective of individual performance, experience and responsibilities. Helen Willis received a salary increase of 10% in 2024 in recognition
of the increased scope of her role to include responsibility for the internal IT function and her exceptional performance.
The 2024 AIP was subject to a mixture of financial and non-financial performance measures aligned with key strategic priorities.
70% was based on financial measures (Adjusted operating profit, profit secured for 2025 and cash flow), and 30% on non-financial
measures (safety, health and environment and personal performance).
Based on the performance against these measures, Alex Vaughan and Helen Willis each earned an AIP equal to 133.5% of salary.
One third of the AIP earned will be deferred into shares for two years. Further details are set out on pages 107 to 108.
The LTIP award granted in April 2022 was subject to EPS performance for two thirds of the award and cash conversion performance
for the balance of the award. Aggregate EPS performance over 2022, 2023 and 2024 was 34.7p and as a result 100% of this element
vested. Average cash conversion over the period was 137% and as a result 100% of this element vested. The 2022 LTIP award is therefore
due to vest at 100% in April 2025. When determining the vesting outcome, the Committee considered whether the formulaic outcome
was an appropriate reflection of the underlying business performance. As part of this assessment, the Committee considered the gain
attributable to the appreciation in share price since the date of grant noting that the number shares awarded under the LTIP in 2022
was based on a share price of 39.7p and the average share price over the three months ended 31 December 2024 was 104.9p. The
Committee also considered the impact of the share buyback programme on EPS performance. The Committee considered whether a
‘windfall gain’ had occurred for the LTIP participants as a result of either of these circumstances. The Committee concluded that given
the overall strong performance and the value delivered to shareholders over the three-year performance period, through the enhanced
share price over the period, the resumption of the dividend in 2023 and the share buyback in 2024, the outturn was fair and that neither
of these circumstances produced a ‘windfall gain’ for the LTIP participants. The Committee concluded that no adjustment to the vesting
outturn was required. The Committee further noted that LTIP awards will be subject to a two-year holding period, so that the Executive
Directors are aligned with the experience of shareholders by reference to share price performance over a longer period. Further details
are set out on page 109.
Annual Statement by Chair of the Remuneration Committee
97Strategic ReportOverview Governance Financial Statements
In line with good practice, these incentive outcomes were reviewed in the broader context of the stakeholder experience. The Committee
considered that these outcomes are a fair reflection of the Group’s underlying financial performance achieved in 2024 and the past
three years. The Committee also noted the good progress made on our journey to transform the business, reduce risk and improve
returns for the benefit of our shareholders, employees, suppliers, customers and communities. As a result of these factors, the Committee
determined the outcomes as set out on the previous page to be appropriate.
2024 LTIP awards
LTIP awards were granted to the executive directors in April 2024 at a level of 100% of salary. Awards are subject to adjusted EPS
performance as regards 50% of the award, absolute TSR performance as regards 25% of the award and ESG performance as regards
25% of the award. Further details, including the performance targets are set out on pages 110 and 111.
Reward for the year ending 31 December 2025
Executive Director base salary increase:
• As set out in the 2023 Directors’ Remuneration Report, following a review, the Committee approved a stepped increase for
Alex Vaughan of 10% in 2024 and a further 4% increase in 2025. Therefore, his base salary will increase to £536,328 effective from
1 April 2025.
• Helen Willis will receive a salary increase for 2025 of 3.5% (in line with the increase awarded to the wider workforce), increasing her
salary to £443,291 with effect from 1 April 2025.
• AIP: The maximum AIP opportunity for executive directors will be 150% of salary. The AIP will continue to be weighted 70% on financial
measures, 10% on safety, health & environment and 20% on personal performance. Details of the AIP performance measures are
provided on page 112 and targets with performance against them will be provided in the 2025 Directors’ Remuneration Report. One
third of the AIP earned will be deferred into shares for two years.
• LTIP: The maximum LTIP opportunity for executive directors will be 100% of salary. Vesting will be subject to adjusted EPS performance
as regards 50% of the award, absolute TSR performance as regards 25% of the award and ESG performance as regards 25% of the
award. Within the ESG performance measures, the environmental measure will be the reduction in water pollution incident rate and the
social measure will continue to be gender and ethnic diversity. Details of the LTIP performance measures and targets are provided on
pages 113 and 114. LTIP awards which vest are only released after five years, thereby ensuring long-term alignment of the executive
directors’ and shareholders’ interests.
Our Directors’ Remuneration Policy
Our current remuneration policy was approved at the 2023 AGM with over 97% of the votes cast in favour of it. We were also pleased
to see strong support for the 2024 Directors’ Remuneration Report, with 88% of votes cast in favour of it. In line with the usual timetable,
we will be seeking shareholder approval for a new directors’ remuneration policy at the 2026 AGM. During the course of 2025 the
Committee will review the full policy to consider its alignment to our ongoing strategy and investor expectations. We will engage with
shareholders in relation to our proposed approach in advance of the publication of the 2025 Directors’ Remuneration Report.
Conclusion
We remain committed to a responsible approach to executive pay and believe the policy operated as intended during the year.
The decisions made as a Committee regarding remuneration earned in respect of 2024 demonstrate our commitment to ensuring that
executive directors’ reward is aligned with performance and the outcomes for all our stakeholders.
We look forward to receiving your support at our 2025 AGM, where I will be available to respond to any questions that shareholders may
have on this report, or our intended approach to reward for 2025.
Fiona MacAulay
Committee Chair
10 March 2025
Directors’RemunerationReport continued
Costain Group PLC | Annual Report and Accounts 202498
Definitions used in this report
AIP: Annual Incentive Plan.
Adjusted operating profit: Adjusted operating profit excludes adjusting items, which are significant items of income and expenditure that
the Board considers do not reflect the long-term performance of the Group. See note 2 of the financial statements on pages 144 to 153
for adjusted metric details and definitions.
Adjusted EPS: Adjusted earnings per share is calculated using adjusted profit. See note 2 of the financial statements on pages 144 to
153 for adjusted metric details and definitions. Underlying earnings per share is then further adjusted by the Remuneration Committee to
exclude pension interest to ensure that the performance measures are assessed on a consistent basis year-to-year.
LTIP: Long-Term Incentive Plan (and including where relevant the plans approved in 2014 and 2023).
SDP: Share Deferral Plan (and including where relevant the plans approved in 2014 and 2023).
Remuneration disclosure
This report, approved by the Board, has been prepared in accordance with the provisions of the Companies Act 2006 and
Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended).
It also meets the requirements of the UK Listing Authority’s Listing Rules and the Disclosure Guidance and Transparency Rules.
In this report we describe how the principles of good governance relating to directors’ remuneration, as set out in the 2018
UK Corporate Governance Code, are applied in practice. The Committee, when determining the policy, addressed the factors
in Provision 40 of the Code as follows:
Clarity – remuneration arrangements are simple and transparent and take account of pay policies for the wider workforce.
Simplicity – we follow a conventional UK market approach to remuneration with established incentive plans that operate
on a clear and consistent basis.
Risk – performance targets are set to reward sustainable business performance, while not encouraging inappropriate business
risks to be taken.
Malus and clawback provisions – apply to AIP and LTIP awards, and the Committee has the means to apply discretion and
judgement to vesting outcomes. The post-employment shareholding requirements further align the interests of executive
directors with those of shareholders following the end of employment.
Predictability – details of the potential values that may be earned by executive directors through their remuneration
arrangements are set out in the policy.
Proportionality – the AIP and LTIP performance measures are clearly aligned to the Group’s strategic objectives. The Committee
takes into account underlying business performance and the experience of shareholders and the wider workforce when
determining vesting outcomes, ensuring that poor performance is not rewarded.
Alignment to culture – the Committee’s intent is that the policy drives the right behaviours, and reflects the Group’s purpose,
values and strategy. The Committee regularly reviews the remuneration framework to ensure that this continues to be the case.
This report is unaudited unless otherwise stated.
99Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
Directors’ Remuneration Policy
Our remuneration policy was approved by shareholders at our AGM on 11 May 2023, supported by over 97% of the votes cast.
We have set out below the policy table and the full remuneration policy is available in the 2022 annual report on the Company’s
website at www.costain.com.
Element
Purpose and link
to strategy Operation Performance metrics Maximum opportunity
Salary
•
To attract and
retain high-calibre
individuals.
• Reflects skills,
experience and
performance
in role.
• Provides an
appropriate
level of basic
fixed income
while avoiding
excessive risk
arising from
over reliance on
variable income.
• Generally reviewed annually (with any
change usually effective from 1 April)
but exceptionally at other times of the
year.
• Set with reference to individual
performance, experience
and responsibilities.
• Reflects the market rate for the
individual and their role, determined
with reference to remuneration levels
in companies of similar size and
complexity, taking into account pay
levels within the Company in general.
• Increases will usually not exceed the
average salary increases for the wider
workforce (in percentage terms).
• Higher increases may be awarded
in appropriate circumstances,
which include but are not limited to,
where an individual is promoted or
changes role or where an individual
is appointed on a below market
salary with the expectation that their
salary will increase with experience
and performance.
• n/a • To avoid setting
expectations
of future salary
increases there is
no maximum salary
value set under
the policy.
Annual
Incentive
Plan
•
To incentivise the
achievement of
key financial and
strategic targets
for the relevant
year without
encouraging
excessive
risk taking.
• Promotes greater
alignment with
shareholders.
• To facilitate
share ownership.
• Two thirds paid in cash.
• Deferral into shares of one third of
earned AIP; this vests following the
end of a two-year deferral period,
which ordinarily ends on the second
anniversary of grant (subject, ordinarily,
to continued employment and not being
under notice of termination, either given
or received, on the date of vesting).
Deferred share awards may be granted
as conditional awards or nil or nominal
cost options.
• The Committee may decide not to
operate deferral where the amount of
the bonus otherwise to be deferred
would, in the opinion of the Committee,
be so small as to make deferral
unduly administratively burdensome.
Executives may, with the approval
of the Committee, elect for a greater
proportion of the AIP award to be
deferred into shares.
• Deferred share awards may include the
right to receive a benefit determined
by reference to the value of dividends
that would have been paid by reference
to dividend record dates ending on
the date on which shares can first be
acquired. The benefit may assume
the reinvestment of dividends into
Costain’s shares on such basis as the
Committee determines.
• Shares provided under the AIP are
typically purchased by a trust on behalf
of the Group so as to not lead to any
dilution of shareholder interest.
• Awards may be subject to malus and
clawback as described below.
• Not pensionable.
• The Committee considers and approves
the performance measures and targets
each year and ensures they are
aligned with business strategy and are
sufficiently stretching.
• Financial metrics will comprise at least
50% of AIP opportunity. Any balance
of the AIP opportunity will be based on
financial metrics and/or non-financial
metrics such as safety and health
targets and personal objectives.
• In setting financial parameters, the
Committee takes into account the
Company’s internal budgets and, where
applicable, brokers’ forecasts. The
targets applying to financial measures
are based on a sliding scale between
0% and 100%. Subject to the discretion
to amend the pay-out as referred to
below, up to 60% of the maximum
potential will be earned for on-target
performance. The targets applying to
non-financial measures are based on a
sliding scale between 0% and 100%.
• The Committee may amend the pay-
out if it considers that the level of
vesting that would otherwise apply
is not appropriate, including where
that level would materially deviate
from the intention of the policy, is
unreflective of underlying financial
or non-financial performance of the
Group or executive director over the
relevant period or is not appropriate
in the context of unexpected or
unforeseen circumstances.
• Maximum: 150%
of salary.
• The combined AIP
and LTIP maximum
opportunities for
any year may
not exceed 250%
of salary.
Costain Group PLC | Annual Report and Accounts 2024100
Element
Purpose and link
to strategy Operation Performance metrics Maximum opportunity
Long-Term
Incentive
Plan
•
Aligned to
main strategic
objectives
of delivering
sustainable
performance
which in turn
should deliver
enhanced returns.
• Annual grant of performance shares,
which vest subject to performance
measured, usually over three years.
Awards may be granted as conditional
awards or nil or nominal cost options
or, as referred to below in relation to
‘Qualifying LTIP’ awards, as options
with an exercise price equal to the
market value of a share when the option
is granted.
• Awards are subject to a further holding
period of two years following the end
of the performance period before they
are released.
• LTIP awards may include the right
to receive a benefit determined by
reference to the value of dividends
that would have been paid on vested
shares by reference to dividend record
dates in the period ending on the date
on which the vested shares can first
be acquired. The benefit may assume
the reinvestment of dividends into
Costain’s shares on such basis as the
Committee determines.
• Awards may be subject to malus and
clawback as described below.
• The Committee may, at its discretion,
structure an LTIP award as a ‘Qualifying
LTIP’ award consisting of a tax-
qualifying option with an exercise
price equal to the market value of a
share when the option is granted,
and an ‘ordinary’ LTIP award, with the
ordinary award scaled back at exercise
to take account of any gain made
on the exercise of the tax-qualifying
option. The provisions of this policy
will apply to a tax-qualifying option
with any amendments necessary
to take account of the applicable
tax legislation.
• The performance condition will be
based on one or more key metrics
aligned to the business strategy,
including but not limited to EPS, return
measures, cash-based measures,
strategic/transformation measures and/
or environmental measures.
• At least 75% of the opportunity will
be subject to financial and/or share
price measures.
• Subject to the discretion to amend
the pay-out as referred to below, up
to 25% of the maximum is earned for
threshold performance, rising to 100%
for maximum with straight-line vesting
usually applying between these points.
• The Committee has discretion to
vary the formulaic vesting outturn if
it considers that the level of vesting
that would otherwise apply is not
appropriate, including where that
level would materially deviate from the
intention of the policy, is unreflective
of underlying financial or non-financial
performance of the Group or executive
director over the vesting period or
is not appropriate in the context of
circumstances that were unexpected or
unforeseen at the grant date.
• LTIP awards with
a face value of not
more than 150%
of salary.
• The combined AIP
and LTIP maximum
opportunities for
any year may
not exceed 250%
of salary.
• If a Qualifying LTIP
award is granted,
the value of shares
subject to the
tax-qualifying
option will not
count towards the
limits referred to
above, reflecting
the provisions for
the scale back
of the ordinary
LTIP award.
SAYE
Scheme
•
Offered to all UK
employees, to
facilitate share
ownership and
provide further
alignment
with shareholders.
• Periodic grants which normally vest
after three or five years subject to
continued service.
• Operated under HMRC requirements as
a tax-qualifying plan.
• Not subject to performance conditions
in line with usual practice.
• Participation on the
same basis as all
other employees.
Pension
•
To aid retention
and remain
competitive in the
marketplace.
• Annual pension allowance.
• Paid as a cash contribution to the
Defined Contribution pension scheme,
personal pension arrangements and/or
a cash supplement.
• n/a • A percentage of
base salary not
exceeding the
pension contribution
available to the
majority of the wider
workforce (which is
currently 10%).
Other
Benefits
•
To aid retention
and be competitive
in the marketplace.
• Healthcare
benefits to
minimise business
disruption.
• Company car (or car allowance) and
fuel allowance.
• Medical insurance.
• Life assurance.
• Other benefits as appropriate, for
example, relocation expenses and
travel and subsistence.
• n/a • n/a
101Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
Share ownership guidelines
The Company has adopted share ownership guidelines to provide further alignment between the interests of the Board and the
Company’s shareholders. During employment, executive directors are expected to build and maintain a shareholding worth not less
than 200% of base salary. Shares subject to LTIP awards for which the performance period has ended (i.e. which are in a holding period,
or which have been released but which are not exercised) and shares subject to SDP awards count towards the shareholding guideline,
on a net of assumed tax basis. Executive directors are required to retain half of the shares acquired pursuant to the LTIP and SDP
(after sales to cover tax) until the shareholding guidelines are met.
The Committee has adopted a post-employment shareholding requirement. Shares are subject to this requirement only if they are
acquired from share plan awards (LTIPs and SDP awards) granted after 1 January 2023. Following employment, an executive director
must retain:
• for the first year after employment, such of their shares which are subject to the post-employment requirement as have a value for
these purposes equal to 200% of salary;
• for the second year after employment, such of those shares as have a value for these purposes equal to 100% of salary;
or in either case and if fewer, all of those shares. The Committee retains discretion to vary the application of the post-employment
shareholding requirement in compassionate circumstances.
Notes
Performancemeasures
The choice of the performance metrics applicable to the AIP reflects the Committee’s aim that our annual incentives should balance
the delivery of stretching financial performance with non-financial indicators. For 2024 and 2025, these non-financial indicators include
safety, health and environment targets, and personal objectives, with further information on pages 107, 108 and 112.
As set out above, at least 75% of the LTIP opportunity will be subject to financial and/or share price measures, with any balance based on
strategic/transformation measures and/or environmental measures. For 2023, 2024 and 2025, the LTIP financial/share price metrics which
apply to 75% of the awards in aggregate are based on long-term earnings performance which is aligned with the financial performance
expected by our shareholders, and a TSR measure in order for there to be a clear alignment of executive directors’ interests with value
created for shareholders and having regard to the importance of execution of the strategy translating to increases in Costain’s share price.
The balance of the 2024 and 2025 awards are based on environmental and social measures, with further information on pages 111 and 113.
AIP and LTIP performance measures may be adjusted if the Committee considers that it would be appropriate to amend the performance
measures (e.g. to take into account a material acquisition or divestment) so that they achieve their original purpose.
Recoveryprovisions
The AIP (including the deferred awards delivered under the SDP) and LTIP awards are subject to ‘malus’ and ‘clawback’ provisions as follows.
For up to two years following the payment of the cash element of an AIP award, the Committee may require repayment of all or part
of the bonus in the event of a material misstatement or error in assessing performance measures which has led to an overpayment of
the bonus or in the event of dismissal due to gross misconduct, or in the event of criminal behaviour, serious reputational damage or
serious corporate failure. Some or all of a deferred share award under the SDP may be clawed back (via a cancellation of the award) prior
to vesting in equivalent circumstances.
For up to two years following the vesting of an LTIP award (or part of an LTIP award) the Committee may require the repayment of all
or part of the award (which may be effected by the cancellation of unvested LTIP awards or vested but unreleased LTIP awards) in the
event of a material misstatement or error in assessing performance measures which has led to an award vesting to a greater degree
than would otherwise have been the case or in the event of dismissal due to gross misconduct, serious corporate failure or serious
reputational damage.
Incentiveplanoperation
The Committee will operate the AIP, SDP, LTIP and SAYE Scheme according to their respective rules.
Share awards under the SDP, LTIP and SAYE Scheme (and any applicable performance conditions) may be adjusted in the event of
a variation of the Company’s share capital or a demerger, special dividend or other event which affects the market price of a share.
Share awards under the SDP and LTIP may be satisfied, in whole or in part, in cash, although the Committee has no intention to settle
any executive director’s award in cash and would do so only in exceptional circumstances, such as where there was a regulatory
restriction on the delivery of shares, or to settle tax liabilities arising in connection with the acquisition of shares. Awards may vest early,
in accordance with the plan rules, in the event of a change of control or other relevant event (such as a winding-up or demerger). Where
an LTIP award vests early, the extent of vesting will be determined taking into account the extent to which the performance condition
has been satisfied (as assessed by the Committee) and, unless the Committee determines otherwise, the proportion of the vesting period
that has elapsed.
Costain Group PLC | Annual Report and Accounts 2024
102
Remuneration policy for chair and non-executive directors
Element
Purpose and link
to strategy Operation
Maximum
opportunity
Fees and
relevant
benefits
Attract and
retain high-
performing
individuals.
• Remuneration for non-executive directors, other than the chair, is determined by the
Board, following consultation between the chair and the chief executive officer. The
chair’s fee is determined by the Board following consultation between the Committee
and the CEO. Fees are typically reviewed annually and any increase is usually effective
from 1 April.
• Remuneration for non-executive directors, other than the chair, comprises a basic
annual fee for acting as non-executive director of the Company and additional fees for
undertaking other roles such as senior independent director, and chair of the Audit and
Risk and Remuneration Committees. Additional fees may also be paid for additional time
commitments.
• Overall fees will remain within the limit set out in the Company’s articles of association.
• The chair and non-executive directors do not participate in any variable pay or share
scheme arrangement, although their fees may be paid in cash or shares.
• May be entitled to benefits such as travel and subsistence and secretarial support, or
other benefits as appropriate.
•
n/a
Legacy arrangements
The Committee retains discretion to make any remuneration payment or payment for loss of office outside the policy in this report where
the terms of the payment were agreed before the policy came into effect provided, in the case of a payment whose terms were agreed
after 7 May 2014 (the date of approval of the Company’s first Directors’ Remuneration Policy) and before this policy came into effect,
the payment was permitted under the policy applying at the date the payment was agreed. For these purposes, ‘payment’ includes the
satisfaction of awards of variable remuneration and, in relation to an award over shares, the terms of the payment are agreed at the time
the award is granted.
Consideration of employee views
There is no employee representation on the Committee. However, the Company liaises actively with employees through engagement
surveys, site visits with Q&A sessions and the employee forum ‘Your Voice’. The chief people and sustainability officer briefs the Board on
employees’ views, ensuring that the Committee’s decisions are taken with appropriate insight to employees’ views.
Consideration of shareholder views
The Committee consulted with shareholders in relation to the development of this policy. On an ongoing basis, the Committee
considers shareholder feedback received in relation to the AGM each year at a meeting following the AGM. This feedback, plus any
additional feedback received during any meetings from time to time, is then considered as part of the Committee’s annual review of
remuneration policy.
When there are material issues relating to executive remuneration or proposed changes in policy, we engage actively with major
shareholders to ensure we understand the range of their views. When significant changes are made within the policy, the Committee
chair will inform shareholders of these.
103Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
Annual Report on Remuneration
The annual report on Remuneration set out on 104 to 120 provides details of how our remuneration policy was implemented in the year
ended 31 December 2024 and how we intend for it to apply for the year ending 31 December 2025. This annual report on Remuneration,
excluding the summary of the 2023 Policy Report 100 to 103 will be subject to an advisory vote at the 2025 AGM.
Governance of the Committee
The Remuneration Committee is comprised exclusively of independent non-executive directors. The members of the Committee,
together with their biographies, are shown on pages 58 and 59 and details of their attendance at Committee meetings is shown below.
The Committee is chaired by Fiona MacAulay. The general counsel and company secretary delegates to the deputy company secretary
all company secretarial matters in relation to this Committee.
Committeemembers
Director Attendance
Fiona MacAulay 100%
Amanda Fisher 100%
Steve Mogford 100%
Tony Quinlan 100%
Terms of reference
The Committee’s terms of reference, which remain unchanged since 2023, are available on the Company’s website at www.costain.com.
Remuneration Committee activity
The following table sets out the key remuneration issues which the Committee covered over the course of the year.
Date Key agenda items
13 February
2024
Considered the extent to which the performance measures were likely to have been met with regard to the LTIP granted in 2021.
Considered the level of pay-out of the 2023 AIP.
Approved in principle the 2024 AIP performance measures and list of participants.
Approved in principle performance targets for the 2024 LTIP grant.
Reviewed and approved the executive directors’ and senior executives’ salary increases for 2024 against benchmarked data.
Noted the results of the 2023 employment engagement survey, which set out the workforce experience, including reward
and compensation.
Reviewed the draft Directors’ Remuneration Report in the 2023 annual report.
5 March 2024 Approved the vesting of the 2021 LTIP awards.
Approved the level of pay-out of 2023 AIP awards.
9 April 2024
(by written
circulation)
Approved the grant of awards under the 2024 LTIP and determined quantum, performance targets, participants and other terms.
Approved the grant of awards under the 2024 SDP in relation to the 2023 bonus pay-out.
Reviewed dilution headroom.
10 December
2024
Received a governance update and market trends paper from the Committee’s advisers.
Reviewed annual salary increase for the wider workforce for 2025.
Reviewed potential CEO and CFO salary increases for 2025 for further consideration at the February 2025 meeting.
Consideration given to the extent to which the performance measures were likely to have been met with regard to the LTIP.
Reviewed and discussed the proposed performance targets for the 2025 LTIP and preliminary list of participants.
Approved the 2025 AIP structure and preliminary list of participants, with targets to be finalised at the next meeting.
Noted the summary results of the 2024 employment engagement survey, which set out the workforce experience,
including reward and compensation. Noted improvements in some scores reflected targeted action during 2024.
Agreed no changes required to the Committee’s terms of reference or its membership.
Costain Group PLC | Annual Report and Accounts 2024104
Committee effectiveness review
As described on page 71, the Board Effectiveness Review was externally facilitated. The review concluded that the Committee
was led by an effective and experienced chair and that good progress had been made in aligning reward with the business strategy.
It was supported well by the secretariat and Deloitte LLP (a member firm of Deloitte Touche Tohmatsu Limited), the external
remuneration consultants.
Advice provided to the Committee
Advice was sought, where appropriate, from a number of sources. During the course of the year, the chief executive officer,
the chief financial officer, the Group’s chair and the chief people and sustainability officer were invited to attend meetings of the
Committee. No individual was present when their own remuneration was being discussed.
To help the Committee in ensuring that the Company’s remuneration practices take due account of market and best practice,
the Committee has access to experienced specialist independent consultants. As mentioned above, during the year, the Committee took
advice, as appropriate, from Deloitte LLP.
It is the policy of the Committee to put the remuneration consultant function out to tender, or to review its services and fees, on a
periodic basis to ensure that the Committee continues to receive independent support and advice of a high standard. Deloitte LLP
was appointed in 2014 by the Committee following a competitive tender process to act as the Committee’s remuneration consultants.
Deloitte LLP received fees of £33,174 charged on a time and materials basis (2023: £33,120) for the year ended 31 December 2024 in
respect of services provided to the Committee.
Deloitte LLP is a founder signatory to the Remuneration Consulting Group’s Code of Conduct and is considered by the Committee to be
objective and independent, having regard to the other services provided by Deloitte LLP to the Group. During the year, Deloitte LLP also
provided advice to the Company in relation to the operation of the Company’s share plans and employment tax.
Voting on the Remuneration Report at the AGM in 2024
Last year’s Remuneration Report was approved by shareholders with a 88.10% (2023 AGM: 99.75%) vote in favour (including
discretionary votes, and with 57,555 votes withheld) and with 11.90% votes against.
Voting on the remuneration policy at the AGM in 2023
The current policy was approved by shareholders with a 97.17% vote in favour (including discretionary votes, and with 111,182
votes withheld) and 2.83% votes against at the Company’s AGM on 11 May 2023. It can be found in the 2022 annual report at
www.costain.com/investors. A summary is provided on pages 100 to 103 of this report.
105Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
Single total figure of remuneration for each director
This table and associated notes have been audited by PwC LLP.
2024
Fixed Variable
Salary
and fees
£
Taxable
benefits
£
Pension*
£
Subtotal
£
Annual
incentive
£
LTIP
#
£
Subtotal
£
Total
£
Executive directors
Alex Vaughan 503,975 2,891 50,397 557,263 688,460 1,197,789 1,886,249 2,443,512
Helen Willis 418,560 11,720 41,856 472,136 571,781 994,715 1,566,496 2,038,632
Non-executive chair
Kate Rock 200,850 – – 200,850 – – – 200,850
Non-executive directors
Bishoy Azmy
1
12,900 – – 12,900 – – – 12,900
Amanda Fisher 53,175 – – 53,175 – – – 53,175
Fiona MacAulay 63,475 – – 63,475 – – – 63,475
Steve Mogford 53,175 – – 53,175 – – – 53,175
Tony Quinlan 72,200 – – 72,200 – – – 72,200
2023
Fixed Variable
Salary
and fees
£
Taxable
benefits
£
Pension**
£
Subtotal
£
Annual
incentive
£
LTIP
##
£
Subtotal
£
Total
£
Executive directors
Alex Vaughan 463,225 2,842 46,322 512,389 547,089 420,043 967,432 1,479,821
Helen Willis 384,705 11,789 38,470 434,964 454,313 348,823 803,136 1,238,100
Non-executive chair
Kate Rock 195,000 – – 195,000 – – – 195,000
Non-executive directors
Bishoy Azmy
1
52,100 – – 52,100 – – – 52,100
Amanda Fisher
2
4,300 – – 4,300 – – – 4,300
Fiona MacAulay 60,400 – – 60,400 – – – 60,400
Steve Mogford
3
8,600 – – 8,600 – – – 8,600
Tony Quinlan 69,125 – – 69,125 – – – 69,125
* A pension contribution of £11,145 and £5,000 was paid into the Company’s Group Flexible Retirement Plan for Alex Vaughan and Helen Willis respectively and the balance
was paid to them directly as a taxable cash sum.
** A pension contribution of £9,721 and £2,083 was paid into the Company’s Group Flexible Retirement Plan for Alex Vaughan and Helen Willis respectively and the balance
was paid to them directly as a taxable cash sum.
#
2022 LTIP award of 1,124,685 shares (Alex Vaughan) and 934,005 shares (Helen Willis) vested at 100%. Value calculated based on average share price over the three months
ended 31 December 2024 being 104.9p per share. Amounts include £17,995 and £14,944 for Alex Vaughan and Helen Willis respectively representing dividends paid and
accrued on their awards and which will be converted to shares on exercise. Of the total amount, amounts of £744,479 and £618,260 for Alex Vaughan and Helen Willis
respectively are attributable to the appreciation of the share price between the date of grant (39.7p) and the average share price over the three months ended 31 December
2024 (104.9p).
## 2021 LTIP award of 710,655 shares (Alex Vaughan) and 590,163 shares (Helen Willis) vested at 74.5%. Value calculated based on share price on vesting on 9 April 2024 being
76.2p per share. In accordance with the applicable regulations, the value included in the 2023 Directors’ Remuneration Report was based on the average share price over
the three months ended 31 December 2023 being 56.1p per share. Of the total amount, amounts of £110,799 and £92,012 for Alex Vaughan and Helen Willis respectively are
attributable to the appreciation of the share price between the date of grant (61p) and the date of vesting (76.2p).
1 Stepped down from the Board on 31 March 2024. The non-executive director basic annual fee was increased to £49,400 from 1 April 2022. Due to an administrative error,
the increase was not paid to Bishoy Azmy and the previous fee of £48,000 continued to be paid. The correct fee was paid in March 2023 backdated to April 2022 and is
therefore reflected in the 2023 remuneration.
2 Appointed to the Board on 1 December 2023.
3 Appointed to the Board on 1 November 2023.
Costain Group PLC | Annual Report and Accounts 2024106
Additional notes to the single total figure of remuneration
(a)Annualsalariesforexecutivedirectors
The annual salaries with effect from 1 April 2024 were £515,700 for Alex Vaughan and £428,300 for Helen Willis.
(b)Taxablebenefitsprovidedtoexecutivedirectors
The main benefits available to the executive directors during 2024, and their approximate values, were a car benefit of £1,366 (2023: £1,366)
for Alex Vaughan and car allowance of £10,500 (2023: £10,500) for Helen Willis, together with private medical insurance for Alex Vaughan
of £1,525 (2023: £1,476) and Helen Willis of £1,220 (2023: £1,289). This package of benefits was unchanged from 2021, 2022 and 2023.
(c)Determinationofthe2024annualincentive
The maximum Annual Incentive Plan (AIP) opportunity for the chief executive officer and the chief financial officer for the year
ended 31 December 2024 remained unchanged from previous years at 150% of base salary, with one third of the earned AIP award
to be deferred into shares for a further two years, subject only to continued service in normal circumstances, and two thirds of the
earned AIP award paid in cash.
The performance measures established by the Committee for the 2024 AIP continued to align with the Company’s strategy while not
encouraging inappropriate business risks to be taken. These included inter alia a target maximum of £45.5m for adjusted operating profit.
The achievement of the performance measures has been reviewed, with appropriate input from the Audit and Risk Committee,
following the end of the 2024 financial year. As shown in the table below, Alex Vaughan and Helen Willis both earned an AIP award equal
to 89% of the maximum opportunity based on an assessment against the performance targets.
As discussed in the annual statement from the Remuneration Committee chair on pages 97 and 98 in line with good practice, these
outcomes were reviewed in the context of the broader stakeholder experience.
The Committee considered that the level of AIP awards made to Alex Vaughan and Helen Willis were a fair reflection of the Group’s
underlying financial performance achieved in 2024. In addition to the strong financial performance, the Committee also noted the strong
safety record, a healthy pipeline of and the significant improvement in the employee engagement survey results.
Performance measures
AIP
opportunity
– maximum
percentage
of bonus
AIP award
– as a
percentage
of bonus
AIP
opportunity
– maximum
percentage
of bonus
AIP award
– as a
percentage
of bonus AIP performance measure
Alex
Vaughan
Alex
Vaughan
Helen
Willis
Helen
Willis
Threshold
(0%)
Target
(60%)
Maximum
(100%)
Actual
performance
%
Pay-out
Adjusted operating profit
(with 90% cash conversion)
1, 2
40% 33% 40% 33% £37.3m £41.4m £45.5m £43.1m 33%
Profit secured for 2025 15% 15% 15% 15% £63.8m £70.9m £78.0m £78.5m 15%
Cash flow
3
15% 11% 15% 11% £47.8m £164.2m £180.6m £169.8m 11%
Safety, health and environment
4
10% 10% 10% 10% see below 10%
Personal performance
20% 20% 20% 20% see personal performance on following page 20%
Total 100% 89% 100% 89% 89%
1 See definition on page 148. Previously known as adjusted EBITA. Target underpinned by 90% cash conversion.
2 For the adjusted operating profit measure, there are intermediate vesting points with 80% and 90% vesting requiring adjusted operating profit of £42.5m and
£44.1m respectively.
3 Measured as average month-end cash balances, pre-acquisition and investments.
4 Achieved Group High Potential Event rate of 0.16, Environmental Incident Frequency Rate of 0.11 and environment engagement and workforce engagement ratios at 80%.
107Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
Personal performance
Personal performance was based on progress towards delivery of the strategy and corporate activities critical to the strategic
transformation of the business which were the personal responsibility of the executive directors. Details of Alex Vaughan’s and
Helen Willis’ performance against their personal objectives are set out below.
Alex Vaughan
Objective Achievement during the year Maximum Award
Performance Production thinking and new standards developed and used consistently across the business
driving predictable, safe, green, faster and more efficient delivery. See pages 8 to 11 for
further details.
Good progress made securing new work, through effective partnering with customers.
See pages 8 to 11 for further details.
10% 10%
People Retained Best Companies 1 Star accreditation as a ‘A Very Good Company to Work For’ in 2024
engagement survey. See page 83 for further details.
Year-on-year increase of Best Companies index (BCI) score, with a 20 point increase over
the prior year and increased response rate of 75%. See page 83 for further details.
Continued investment in learning and development in particular the launch of B and C leadership
programme, further embedding leadership framework. See page 85 for further details.
Achieved Disability Confident Leader (level 3) and recognised as a Times Top 50 Employer
for Gender Equality. See page 79 for further details.
Enhanced parental and carers leave policies and a second cohort of Empower programme.
See page 84 for further details.
5% 5%
Planet Confirmation of near-term and net-zero targets by the Science-Based Target Initiative.
See page 41 for further details.
Reduced absolute emissions by 1%, (9% from 2021 baseline when normalised by turnover).
See page 43 for further details.
Achieved re-certification from BSI to PAS 2080:2023 driving a consistent approach to effective
carbon management across the business. See page 36 for further details.
5% 5%
20% 20%
Helen Willis
Objective Achievement during the year Maximum Award
Performance Identified and adopted new technologies and digital solutions to drive value for customers
through increased productivity, reduced costs, improving data; safety and reducing impact
on the environment. See page 23 for further details.
The Transformation programme to simplify and increase efficiencies largely completed in
2024 achieving and exceeding original financial and non-financial targets, strengthening
the organisation and supporting continual growth. See page 49 for further details.
Good progress made securing new work, through effective partnering with customers.
See pages 8 to 11 for further details..
10% 10%
People Successfully launched new HR system to improve employee experience, enhance cybersecurity,
and enable greater digital integration. See page 81 for further details.
5% 5%
Planet Confirmation of near-term and net-zero targets by the Science-Based Target Initiative.
See page 41 for further details.
Reduced absolute emissions by 1%, (9% from 2021 baseline when normalised by turnover).
See page 43 for further details.
Developed environmental construction data tracker, the first phase of which focuses on carbon,
enabling carbon emissions on projects and from supply chain to be captured ‘as built’ to
further improve carbon management and accuracy and transparency of carbon. See page 36
for further details.
Continued to enhance and improve climate related disclosures. See pages 36 to 43 for
further details.
5% 5%
20% 20%
Costain Group PLC | Annual Report and Accounts 2024108
(d)VestingoftheApril2022LTIPaward
The LTIP awards granted on 6 April 2022 to Alex Vaughan and Helen Willis were based on aggregate adjusted EPS and cash conversion
performance for the three years ended 31 December 2024.
Performance against the measures and the resulting vesting outcome is shown below. Aggregate adjusted EPS for the three financial
years (relating to two thirds of the award), calculated on an adjusted basis approved by the Committee, was 34.7 pence as a result of
which this element of the LTIP awards is due to vest at 100%. Cash conversion performance targets (relating to one third of the award)
were achieved to the full extent and so 100% of this element of the award is due to vest. Therefore, the 2022 LTIP is due to vest over a
total of 100%.
The award vests in April 2025 but is subject to a further holding period of two years following the end of the performance period,
thereby ensuring long-term alignment of the executive directors’ and shareholders’ interests.
(A) Adjusted EPS performance measure (relating to two thirds of the award)
Aggregate adjusted EPS for the financial years ended 31 December 2022, 2023 and 2024 Vesting level for awards
Below 27.5 pence 0%
27.5 pence 15%
Between 27.5 pence and 33.7 pence 15–100% pro-rata
33.7 pence or more 100%
Actual performance: 34.7 pence Vesting outcome: 100%
For the purposes of the LTIP, adjusted EPS is further adjusted by the Committee to exclude pension interest to ensure that the
performance measures are assessed on a consistent basis year-to-year. For definition see page 99.
(B) Cash conversion performance measure (relating to one third of the award)
Average cash conversion for the financial years ended 31 December 2022, 2023 and 2024 Vesting level for awards
Below 80% 0%
80% 15%
Between 80% and 100% 15–100% pro-rata
100% or more 100%
Actual performance: 137% Vesting outcome: 100%
(e)Pensionsandlifeassurance
Alex Vaughan’s and Helen Willis’ pension provision is equal to 10% of salary and life assurance cover of four times’ base salary is provided
through the Costain Life Assurance Scheme, both in line with the wider workforce.
The Group offers a Group Flexible Retirement Plan which was set up in 2009 with Standard Life for employees and senior management.
This was switched to Scottish Widows with effect from 1 May 2022. Alex Vaughan was a participant of this Scheme until 31 May 2022
and then rejoined (capped) from May 2023. Helen Willis has been a participant (also capped) since August 2023.
(f)Chair
Kate Rock was appointed to the Board as a non-executive director on 1 November 2022. With effect from her appointment as chair on
1 December 2022, the basic annual fee for Kate Rock was £195,000. This fee was reviewed during 2024 and was increased to £202,800
with effect from 1 April 2024.
(g)Non-executivedirectors
Remuneration for non-executive directors, other than the chair, comprises a basic annual fee for acting as a non-executive director of
the Company and additional fees for the senior independent director and chair of the Audit and Risk and Remuneration Committees.
The annual fees set with effect from 1 April 2024 were as follows:
2024 Fees Basic Fee
Senior
independent
director
Audit and Risk
Committee chair
Remuneration
Committee chair
Fees £53,700 £8,800 £10,400 £10,400
109Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
Grants made during the year
These tables and the associated footnotes have been audited by PwC LLP.
2024LTIPgrant
Grants were made under the LTIP on 9 April 2024 to Alex Vaughan, Helen Willis and other members of the senior leadership team.
The grant level for the executive directors remained at 100% of salary.
The award vests after three years, subject to continued service and the achievement of performance measures (as set out below) but
cannot be exercised until after five years, thereby ensuring long-term alignment of the executive directors’ and shareholders’ interests.
Performance measures for the 2024 LTIP are as follows:
Adjusted EPS performance measure (50% of the award)
Aggregate adjusted EPS over the financial years ending 31 December 2024, 2025 and 2026 Vesting level for awards
Below 32.2 pence 0%
32.2 pence 25%
Between 32.2 pence and 39.4 pence 25–100% pro-rata
39.4 pence or more 100%
The Committee believes that adjusted EPS remains an appropriate metric to use under the LTIP, as growth in adjusted EPS is one of the
key drivers of the Company’s share price. As with previous LTIP awards, adjusted EPS shall be further adjusted by the Committee to
exclude pension interest to ensure that the performance measures are assessed on a consistent basis year-to-year. For definition see
page 99.
TSR performance measure (25% of the award)
TSR growth over the financial years ending 31 December 2024, 2025 and 2026 Vesting level for awards
Less than 50% 0%
50% 25%
More than 50% but less than 100% 25–100% pro-rata
100% or more 100%
The Committee believes that the use of a TSR element in the LTIP provides a clear alignment of executive directors’ interests with value
created for shareholders and reflects the importance of execution of the business’ strategy translating to increases in our share price.
For these purposes TSR will be based on a one-month average prior to the start of the performance period and at the end of the
performance period.
ESG performance measures (25% of the award)
Environmental: Reduction in Scope 1 and 2 carbon emissions compared to 2021 baseline (15% weighting) Vesting level for awards
Below 16.2% 0%
16.2% 25%
Between 16.2% and 19.8% 25–100% pro-rata
19.8% or more 100%
Costain Group PLC | Annual Report and Accounts 2024110
Social: Equality, diversity and inclusion (EDI)
Improvement in wider leadership
1
population gender diversity (5% weighting) Vesting level for awards
Below 22% 0%
22% 25%
Between 22% and 28% 25–100% pro-rata
28% or more 100%
Improvement in wider leadership
1
population ethnic diversity (5% weighting) Vesting level for awards
Below 9% 0%
9% 25%
Between 9% and 13% 25–100% pro-rata
13% or more 100%
1 Wider leadership population is defined as Executive Board and employee bands A-C.
The Committee has the discretionary power to vary these targets should circumstances change such that the original targets are no
longer considered appropriate (e.g. in the case of a material acquisition or divestment in the Group or other material transaction).
A clawback and malus provision is incorporated in the AIP and the LTIP with regard to any material misstatement to audited accounts,
an error in calculation of targets resulting in an overpayment, gross misconduct or criminal behaviour on the part of a participant,
reputational damage or serious corporate failure.
The Committee also has the ability to exercise discretion to make adjustments to the formulaic vesting outcome if it is not considered
to be appropriate taking into account business performance during the performance period. This includes consideration of any windfall
gains at the point of vesting. In assessing whether there is any windfall gain, the Committee will take into account a number of factors,
including share price performance over the vesting period, financial performance of the business and any other significant events which
have impacted the Company’s share price or the market as a whole.
The share awards granted under the 2024 LTIP, structured as options with a nil exercise price, are as follows:
Type of Award Number of shares Face value
1
End of performance period Threshold vesting
Alex Vaughan Nil cost option 666,279 £515,700 31 December 2026 25%
Helen Willis Nil cost option 553,359 £428,300 31 December 2026 25%
1 Valued using the mid-market closing share price on the three business days prior to the date of grant (4, 5 and 8 April 2024), being 77.4 pence.
Both Alex Vaughan and Helen Willis also received a tax qualifying market value option as part of a ‘Qualifying LTIP’ which is subject to the same performance conditions as the
‘ordinary LTIP’ award. Each tax qualifying option is over 77,519 shares and has an exercise price of 77.4 pence per share. These tax qualifying options are linked to the nil cost
option such that, at the time of exercise, to the extent that there is a gain in the tax qualifying option, the nil cost option will be forfeited to the value of that gain.
2024SDPgrant
The Company granted awards under the SDP to the executive directors on 9 April 2024, details of which are shown on page 119.
All-employeeshareplan
During 2024, the Company invited employees to participate in the Save As You Earn (SAYE) Scheme, which is open to all employees
on the same basis. SAYE Scheme awards were granted to the executive directors during 2024 as set out on page 119.
111Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
Exit payments made during the year and payments made to past directors
This section has been audited by PwC LLP.
No executive directors departed in 2024 and no payments have been made to past directors.
Implementation of policy in the year to 31 December 2025
Salary
As set out in the chair’s statement and explained to shareholders in last year’s Directors’ Remuneration Report, the chief executive
officer will receive a salary increase of 4% with effect from 2025. The chief financial officer will receive a salary increase in 2025 of 3.5%
in line with the average salary increase for the wider workforce.
Salary 2025 Salary 2024 % change
Alex Vaughan £536,328 £515,700 4%
Helen Willis £443,291 £428,300 3.5%
Chair’sfee
The chair’s basic annual fee will be increased in 2025 by 3.5% to £209,898 per annum in line with the average salary increase for the
wider workforce.
Non-executivedirectorfees
Non-executive directors’ basic fees will be increased by 3.5% in line with the average salary increase for the wider workforce, including
fees for the senior independent director, Audit and Risk Committee chair and Remuneration Committee chair, with effect from 1 April 2025,
as shown in the table below.
2025 Fees Basic Fee
Senior
independent
director
Audit and Risk
Committee chair
Remuneration
Committee chair
Fees £55,580 £9,108 £10,764 £10,764
2025AnnualIncentive
Executive directors and the wider senior leadership team are eligible for annual bonuses under the AIP to encourage improved
performance, with targets established by the Committee to align rewards with the Company strategy. The targets are clearly aligned
with the delivery of our strategy. Their achievement will be reviewed, with appropriate input from the Audit and Risk Committee, at the
end of the year.
The maximum AIP opportunity for the chief executive officer and the chief financial officer for the year ending 31 December 2025 will
remain unchanged from previous years at 150% of base salary, with one third of earned AIP deferred into shares for a further two years,
to be awarded under the SDP, and two thirds of earned AIP paid in cash.
The performance measures for the 2025 AIP are as detailed below:
Performance measures
2025 AIP opportunity –
maximum percentage of bonus
Chief executive officer Chief financial officer
Adjusted operating profit (with 90% cash conversion) 40% 40%
Profit secured for 2026 15% 15%
Cash flow 15% 15%
Safety, health and environment 10% 10%
Personal performance 20% 20%
Total 100% 100%
The Committee has chosen not to disclose in advance the details of the performance targets for the year ending 31 December 2025,
as these include items which the Committee considers commercially sensitive. The Committee will continue to provide retrospective
disclosure of such performance targets in next year’s annual report on Remuneration to the extent the Committee determines these
targets are not commercially sensitive.
Costain Group PLC | Annual Report and Accounts 2024
112
2025LTIPgrant
The grant level for the executive directors will be up to 100% of salary. It is expected the LTIP awards will be granted in April 2025.
The LTIP will be subject to the achievement of performance measures unchanged from 2024 as set out below. LTIP shares which vest
after three years will be subject to a further holding period of two years following the end of the performance period, thereby ensuring
long-term alignment of the executive directors’ and shareholders’ interests.
The proposed targets are set out below.
Adjusted EPS performance measure (50% of the award)
Aggregate adjusted EPS over the financial years ending 31 December 2025, 2026 and 2027 Vesting level for awards
Below 38.8 pence 0%
38.8 pence 25%
Between 38.8 pence and 45.9 pence 25–100% pro-rata
45.9 pence or more 100%
The Committee believes that adjusted EPS remains an appropriate metric to use under the LTIP, as growth in adjusted EPS is one of
the key drivers of the Company’s share price. As with previous LTIP awards, adjusted EPS shall be further adjusted by the Committee
to exclude pension interest to ensure that the performance measures are assessed on a consistent basis year-to-year (see page 148
for definition). When setting the EPS targets, the Committee considered a range of factors including internal and external forecasts,
market conditions and the impact of other relevant factors including bank interest and tax rates. The Committee considers the proposed
targets to be appropriately stretching.
TSR performance measure (25% of the award)
TSR growth over the financial years ending 31 December 2025, 2026 and 2027 Vesting level for awards
Less than 50% 0%
50% 25%
More than 50% but less than 100% 25–100% pro-rata
100% or more 100%
The Committee believes that the use of a TSR element in the LTIP provides a clear alignment of executive directors’ interests with value
created for shareholders and reflects the importance of execution of the business’ strategy translating to increases in our share price.
For these purposes TSR will be based on a one-month average prior to the start of the performance period and at the end of the
performance period.
ESG performance measures (25% of the award)
Environmental: Reduction in water pollution environmental incident rate compared to 2024 baseline (15% weighting) Vesting level for awards
Below 40% 0%
40% 25%
Between 40% and 50% 25–100% pro-rata
50% or more 100%
Social: Equality, diversity and inclusion (EDI)
Improvement in wider leadership
1
gender diversity (5% weighting) Vesting level for awards
Below 27% 0%
27% 25%
Between 27% and 33% 25–100% pro-rata
33% or more 100%
Improvement in wider leadership
1
ethnic diversity (5% weighting) Vesting level for awards
Below 16% 0%
16% 25%
Between 16% and 20% 25–100% pro-rata
20% or more 100%
1 Employee bands D-F, which is a wider population of senior management below the Executive Board and senior management level than for the 2024 LTIP grant. See page 78
for further details about our equality, diversity and inclusion programmes.
113Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
The Committee has the discretionary power to vary these targets should circumstances change such that the original targets are
no longer considered appropriate (e.g. in the case of a material acquisition or divestment in the Group or other material transaction).
A clawback and malus provision is incorporated in the AIP and the LTIP with regard to any material misstatement to audited accounts,
an error in calculation of targets resulting in an overpayment, gross misconduct or criminal behaviour on the part of a participant,
reputational damage or serious corporate failure.
The Committee also has the ability to exercise discretion to make adjustments to the formulaic payout/vesting of variable incentives
if the formulaic outcome is not considered to be appropriate.
Other information
Performancegraph
The graph below shows the value, to 31 December 2024, of £100 invested in Costain Group PLC on 1 January 2015 compared with the
value of £100 invested in the FTSE SmallCap Index. The Committee believes that the FTSE SmallCap Index is the most appropriate index
to use as it is the index in which the Company is a constituent and comprises companies of a similar size to Costain.
300
250
200
150
100
50
0
1 Jan
2015
31 Dec
2015
31 Dec
2016
31 Dec
2017
31 Dec
2018
31 Dec
2019
31 Dec
2020
31 Dec
2021
31 Dec
2022
31 Dec
2023
31 Dec
2024
FTSE SmallCap Index
Costain Group PLC
Change in chief executive officer’s remuneration
2015 2016 2017 2018 2019
1
2020 2021 2022 2023 2024
Chief executive officer AW AW AW AW AW/AV AV AV AV AV AV
Total remuneration £1,414,381 £1,089,943 £1,707,094 £1,560,601 £524,169 £447,710 £980,793 £1,146,715 £1,358,611 £2,443,512
AIP (%) 79.5% 75.4% 81% 62.5% Nil Nil 73% 72% 77.8% 89%
LTIP vesting (%) 50% Nil% 79.1% 100 Nil Nil 25% 81.1% 74.5% 98%
1 Andrew Wyllie (AW) stepped down from the Board on 7 May 2019 and Alex Vaughan (AV) was appointed to the Board on 7 May 2019. Total remuneration in 2019 for
Andrew Wylie was £211,927 and for Alex Vaughan was £312,242.
Costain Group PLC | Annual Report and Accounts 2024114
CEO pay ratio
The table below shows, for 2019 to 2024, the ratio of the pay of the CEO to that of the best full-time equivalent lower quartile, median
and upper quartile employee within the Group.
Year Methodology used
25th Percentile
Pay Ratio
50th Percentile
Pay Ratio
75th Percentile
Pay Ratio
2024 Option B 48:1 34:1 26:1
2023 Option B 35:1 19:1 15:1
2022 Option B 23:1 19:1 14:1
2021 Option B 22:1 17:1 13:1
2020 Option B 13:1 8:1 6:1
2019* Option B 17:1 10:1 7:1
* The Single Total Figure of Remuneration for the CEO has been calculated as the total remuneration paid to Andrew Wyllie for the period 1 January 2019 to 7 May 2019 plus
the total remuneration paid to Alex Vaughan for the period 8 May 2019 to 31 December 2019.
We have chosen to use Option B of the available methodologies to calculate the ratio. This methodology is based on the data collected
as part of the latest gender pay reporting and the calculations were performed as at the final day of the relevant financial year.
Option B was selected on the basis that it is an efficient and robust approach, recognising that the data required to calculate the ratio
comes from multiple sources. Analysis has been performed to ensure that the lower quartile, median and upper quartile employees are
reasonably representative.
The table below shows the UK employee percentile pay and benefits used to determine the above pay ratios and the salary component
for each figure.
CEO 25th percentile Median 75th percentile
2024
Total pay and benefits £2,443,512 £50,985 £72,437 £92,281
Salary component £503,975 £46,350 £60,320 £77,171
2023
Total pay and benefits £1,358,611 £39,058 £72,612 £88,740
Salary component £463,225 £37,046 £65,073 £78,746
2022
Total pay and benefits £1,146,715 £50,792 £61,412 £82,181
Salary component £443,250 £39,282 £56,237 £68,483
2021
Total pay and benefits £980,793 £45,166 £56,596 £77,235
Salary component £431,375 £39,470 £46,476 £57,330
2020
Total pay and benefits £447,710 £34,016 £57,580 £73,844
Salary component £393,125 £32,948 £45,934 £61,669
2019
Total pay and benefits £524,169 £30,923 £50,903 £75,304
Salary component £445,319 £29,837 £45,170 £60,137
The UK employee percentile pay and benefits has been calculated based on the amount paid or receivable for the relevant financial year.
The calculations are on the same basis as required for the CEO’s remuneration for single total figure purposes.
A high proportion of the CEO’s total reward is performance-related and delivered in shares. The ratios will therefore depend significantly
on the CEO’s variable pay outcomes and may fluctuate year-to-year. The difference in ratios from 2023 to 2024 reflects the CEO’s pay
increase for 2024, which was significantly above the workforce average, following a review of his salary to better position his pay in line
with market conditions, and to reflect individual performance, experience and responsibilities, the AIP and LTIP outcomes based on strong
Company performance and the growth in the share price since 2022. In both 2019 and 2020, no bonus was paid to the CEO. In addition,
in 2020 the CEO pay was lower due to the reduction in salaries from April to June 2020 as part of the actions taken by the Group to
mitigate the financial impacts of COVID-19 and protect the Group’s cash position.
The Board believes that the median pay ratio is consistent with the Group’s wider policies on pay, reward and progression.
115Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
Annual percentage change in remuneration of directors compared to all employees
The table below shows the annual percentage change in each director’s remuneration compared to the average employee remuneration.
Further information in relation to the 2023-24 changes is set out below the table. Information relating to the changes between previous
years is included in the relevant Directors’ Remuneration Reports.
Average
employee
1
Executive directors
Non-
executive
chair Non-executive directors
Alex
Vaughan
Helen
Willis
Kate
Rock
Bishoy
Azmy
2
Amanda
Fisher
3
Fiona
MacAulay
Tony
Quinlan
Steve
Mogford
4
Salary/fees
2023–2024 5.6
5
8.8 8.8 3 n/a n/a 5 4 n/a
2022–2023 6.6
5
4.5 4.5 n/a 8.5
6
n/a n/a 5.2
7
n/a
2021–2022 3.6
5
3 2 n/a 0.5 n/a n/a n/a n/a
2020–2021 5
5
10 n/a n/a n/a n/a n/a n/a n/a
2019–2020 (0.8)
5,10
n/a n/a n/a n/a n/a n/a n/a n/a
Taxable benefits
2023–2024 (23)
8
1.7 0.6 n/a n/a n/a n/a n/a n/a
2022–2023 0.0
8
4.7 3.1 – – – – – n/a
2021–2022 0.2
8
(80) 1 n/a – – n/a n/a n/a
2020–2021 (6)
8
(16) n/a n/a n/a n/a n/a n/a n/a
2019–2020 6.2
8
n/a n/a n/a n/a n/a n/a n/a n/a
Annual bonus
2023–2024 12
9
25.8 25.8 n/a n/a n/a n/a n/a n/a
2022–2023 55.8
9
13.5 13.4 – – – – – n/a
2021–2022 (7)
9
2 2 n/a – – n/a n/a n/a
2020–2021 236
9
n/a n/a n/a n/a n/a n/a n/a n/a
2019–2020 (18)
9
n/a n/a n/a n/a n/a n/a n/a n/a
1 The percentage change in each element of employee remuneration is based on all monthly paid UK employees across the Group. This population has been selected as no
employees are directly employed by the listed parent entity.
2 Bishoy Azmy was appointed to the Board on 19 June 2020 and stepped down on 31 March 2024 and therefore annual change in remuneration between 2019 and 2020,
between 2020 and 2021 and between 2023 and 2024 is not applicable.
3 Amanda Fisher was appointed to the Board on 1 December 2023 and therefore annual change in remuneration is not applicable for the financial years shown.
4 Steve Mogford was appointed to the Board on 1 November 2023 and therefore annual change in remuneration is not applicable for the financial years shown.
5 Average salary for employees is calculated based on the annual monthly UK salary bill divided by the average number of monthly paid UK employees.
6 The non-executive director basic annual fee was increased to £49,400 from 1 April 2022. Due to an administrative error, the increase was not paid to Bishoy Azmy and the
previous fee of £48,000 continued to be paid. The correct fee was paid in March 2023 backdated to April 2022 and is therefore reflected in the 2023 remuneration.
7 Tony Quinlan received the following fee increases with effect from 1 April 2023: non-executive director’s basic (4.5%), senior independent director (23.2%) and Audit and
Risk Committee chair (1%).
8 Employee benefits are calculated based on the total cost to the Company of private medical insurance, company cars and car allowances, averaged per head for monthly
paid employees.
9 Bonus figures are calculated on the total bonus payments made to monthly employees divided by the average number of monthly paid employees.
10 The wider workforce (those earning over £45,000) agreed to 10% to 30% reduction in salaries for the period April to June 2020 in response to COVID-19. There was
therefore a reduction in salaries received by some employees during 2020 compared to 2019 which impacted the average employee figure.
Costain Group PLC | Annual Report and Accounts 2024116
Relative importance of spend on pay
The table below illustrates the change in expenditure by the Company on remuneration paid to all the employees of the Group and
distributions to shareholders from the financial year ended 31 December 2023 to the financial year ended 31 December 2024.
2024
£m
2023
£m
%
change
Overall expenditure on pay 233.3 235.9 (2.35%)
Dividends and share buybacks
1
13.3 1.1 1,109%
1 There was no share buyback in 2023.
These matters were selected to be shown as they represent key distributions by the Group to its stakeholders.
Directors’ appointments
The executive directors have service contracts that can be terminated by either party on the giving of 12 months’ notice.
The non-executive directors have letters of appointment. The independent non-executive directors are appointed for initial three-year
terms which thereafter may be extended. The appointment of a non-executive director can be terminated by not less than one month’s
notice on either side, with three months for the chair. Each non-executive director is subject to re-election at the AGM each year.
The dates of each director’s original appointment and expiry of current term are as follows:
Director
Date of original
appointment
Effective date of latest
appointment letter Expiry of current term
1,2
Alex Vaughan 7 May 2019 7 May 2019 Terminable on 12 months’ notice
Helen Willis 30 November 2020 30 November 2020 Terminable on 12 months’ notice
Kate Rock 1 November 2022 1 November 2022 1 November 2025
Amanda Fisher 1 December 2023 1 December 2023 1 December 2026
Fiona MacAulay 6 April 2022 6 April 2022 6 April 2025
Steve Mogford 1 November 2023 1 November 2023 1 November 2026
Tony Quinlan 1 February 2021 1 February 2024 1 February 2027
1 The appointment of a non-executive director may be terminated by reasonable notice on either side (of not less than one month, with three months for the chair).
2 In accordance with the 2018 and 2024 UK Corporate Governance Codes, all the directors are required to seek election or re-election.
Externaldirectorships
Neither of the executive directors held external directorships in the year.
117Strategic ReportOverview Governance Financial Statements
Directors’RemunerationReport continued
The following tables and the associated footnotes have been audited by PwC LLP.
Share awards under the Long-Term Incentive Plan (LTIP)
Details of the executive directors’ participation in the LTIP are as follows:
Director
Date
granted
Balance at
1 January
2024
a
Granted
during year
Share price
at date of
grant
Vested
during year
Lapsed
during year
Market price
at date of
exercise
Average
market
price
b
Value of
shares at
date of sale/
retention of
balance
c
Balance at
31 December
2024
Actual/
expected
vesting/
release date
Alex
Vaughan
07.05.19
1
34,735 – 325p – – – – – 34,735 May 2024
07.10.20
1
449,220 – 42.2p _ _ – – – 449,220 April 2025
08.04.21
1
710,655 – 61.0p 529,438 181,217 – – – 529,438 April 2026
06.04.22
2
1,124,685 – 39.7p – – – – – 1,124,685 April 2027
06.04.23
1
849,275 – 55.2p – – – – – 849,275 April 2028
09.04.24
3
– 743,798 77.4p – – – – – 743,798 April 2029
Helen
Willis
30.11.20
1
209,809 – 53.7p – – – – – 209,809 April 2025
08.04.21
1
590,163 – 61.0p 439,671 150,492 – – – 439,671 April 2026
06.04.22
2
934,005 – 39.7p – – – – – 934,005 April 2027
06.04.23
1
705,253 _ 55.2p – – – – – 705,253 April 2028
09.04.24
3
– 630,878 77.4p – – – – – 630,878 April 2029
a Subject to note 3 below, awards under the LTIP are structured as options with a nil exercise price. 2019 awards adjusted for the capital raising using the adjustment factor
of 1.0625.
b At date of sale/retention of balance.
c Excluding shares deducted to settle tax sold at market price on date of exercise.
1 Details of the performance conditions, as applicable, for these awards and performance against these conditions are set out in the relevant Directors’ Remuneration
Reports for prior years.
2 Details of the performance conditions for the 2022 LTIP and perforance against these conditions are on page 109.
3 Details of the performance conditions for the 2024 LTIP are on pages 110 to 111. Of the total number of shares awarded under the 2024 LTIP both Alex Vaughan and Helen
Willis received 77,519 shares as a tax qualifying market value option as part of a ‘Qualifying LTIP’ with an option price of 77.4 pence. These shares are subject to the same
performance conditions as the ‘ordinary LTIP’ award. These tax qualifying options are linked to the nil cost option such that, at the time of exercise, to the extent that there
is a gain in the tax qualifying option, the nil cost option will be forfeited to the value of that gain.
At 31 December 2024, the derived mid-market price of the ordinary shares in the company, as advised by the company’s brokers was
106 pence. The range of the closing share price of an ordinary share during 2024 was 61 pence to 111 pence.
Costain Group PLC | Annual Report and Accounts 2024
118
Share awards under the Share Deferral Plan (SDP)
Details of the executive directors’ participation in the SDP are as follows:
Director
Date
granted
Balance at
1 January
2024
Granted
during year
1
Share price
at date of
grant
Vested
during year
Lapsed
during year
Market price
at date of
exercise
Average
market
price
2
Value of
shares at
date of sale/
retention of
balance
3
Balance at
31 December
2024
1
Actual/
expected
vesting date
Alex
Vaughan
06.04.22 597,836 – 39.7p 597,836 – 77.8p 77.8p £247,792 – April 2024
06.04.23 291,195 _ 55.2p – – – – – 291,195 April 2025
09.04.24 – 235,611 77.4p – – – – – 235,611 April 2026
Helen
Willis
06.04.22 496,473 – 39.7p 496,473 – 107.0p 107.0p £283,012 – April 2024
06.04.23 241,826 – 55.2p – – – – – 241,826 April 2025
09.04.24 – 195,656 77.4p – – – – – 195,656 April 2026
1 Awards under the SDP are structured as options with a nil exercise price.
2 At date of sale/retention of balance.
3 Excluding shares deducted to settle tax sold at market price on date of exercise.
Share options under the SAYE Scheme (Sharesave)
Details of the executive directors’ SAYE Scheme options are as follows:
Director
Date
granted
Balance at
1 January
2024
Granted
during year
Exercise
price
1
Exercised
during year
Lapsed
during year
Market price
at date of
exercise
Market price
at date of
retention
Value of
shares at
date of
retention
Balance at
31 December
2024
Exercised/
exercisable
from/to
Alex
Vaughan
19.10.23 6,974 – 50.0p – – – – – 6,974 Dec 2026
Jun 2027
11.10.24 – 4,568 81.2p – – – – – 4,568 Dec 2027
Jun 2028
Helen
Willis
19.10.23 6,974 – 50.0p – – – – – 6,974 Dec 2026
Jun 2027
11.10.24 – 4,568 81.2p – – – – – 4,568 Dec 2027
Jun 2028
1 The exercise price is determined as 80% of the average of the closing mid-market share price on the three business days prior to the invitation to employees to participate
in the SAYE Scheme, subject to not being lower than the nominal value of a share.
No executive director exercised an SAYE Scheme share option in 2024 and therefore there was no gain on exercise. The Company
granted no options under the SAYE Scheme in 2020, 2021 or 2022.
119Strategic ReportOverview Governance Financial Statements
Directors’ shareholdings
The executive directors are expected to build and maintain a shareholding of not less than 200% of base annual salary through the
retention of vested share awards or through open market purchases. With effect from approval of the new remuneration policy in 2023,
non-executive directors are not expected to build and maintain a shareholding. Details of the directors’ share interests in the Company
as at 31 December 2024, and at the date of this report, are as set out below.
Director
Beneficially
owned
1
Outstanding
SDP awards
2
Outstanding
Vested LTIP
awards
3
Outstanding
SAYE
Scheme
awards
4
Shareholding
guidelines
(% of salary/
fee)
Actual
shareholding
as at 31.12.24
(% of salary/
fee)
5, 6
Actual
shareholding
as at 10.03.25
(% of salary/
fee)
5, 6
Alex Vaughan 570,737 526,806 1,013,393 11,542 200% 285% 285%
Helen Willis 132,248 437,482 649,480 11,542 200% 175% 175%
Kate Rock 100,000 – – – n/a n/a n/a
Amanda Fisher – – – – n/a n/a n/a
Fiona MacAulay – – – – n/a n/a n/a
Steve Mogford – – – – n/a n/a n/a
Tony Quinlan 25,000 – – – n/a n/a n/a
1 Including shares held by persons closely associated.
2 Unexercised SDP awards.
3 Vested but unexercised LTIP awards.
4 Not included in the total actual shareholding as shares not yet vested.
5 Calculated by reference to the closing mid-market share price of 106p on 31 December 2024.
6 In calculating the number of shares which count for the determination of the extent to which directors meet the shareholding guidelines, additional shares in respect of the
dividend payable on vested but unexercised LTIP awards have been included and a reduction made in respect of anticipated tax and national insurance, which would be
payable on exercise of both SDP and LTIP awards.
By Order of the Board
Fiona MacAulay
Committee Chair
10 March 2025
Directors’RemunerationReport continued
Costain Group PLC | Annual Report and Accounts 2024120
Directors’Report
The Governance Report on pages 58 to 93 and the Strategic
Report on pages 8 to 57 (and in particular pages 32 to 45 and 74
to 85, with regard to information about employee involvement,
diversity, cyber security, greenhouse gas emissions and measures
in relation to increasing the Company’s energy efficiency) are also
incorporated into this report by reference.
The Company has chosen to include the disclosure of likely future
developments of the Company’s business in the Strategic Report.
Climate-related disclosures consistent with the Task Force on
Climate-related Financial Disclosures (TCFD) Recommendations
and TCFD Recommended Disclosures can be found on pages
36 to 40.
Incorporation and constitution
Costain Group PLC is domiciled in England and incorporated
in England and Wales under Company Number 1393773.
Annual General Meeting (AGM)
The Company’s 2025 AGM will be held on Thursday 15 May 2025
on the Seventh Floor of 70 St Mary Axe, London, EC3A 8BE.
A circular incorporating the Notice of AGM accompanies this
annual report.
Change of registered office
On 5 August 2024 the Company and its subsidiaries based in
England changed their registered office from Costain House,
Vanwall Business Park, Maidenhead, Berkshire, SL6 4UB to
Seventh Floor, 70 St Mary Axe, London, EC3A 8BE.
Profit, dividend payments and dividend policy
The profit after tax for the financial year ended 31 December 2024
was £30.6m (2023: £22.1m). An interim dividend of 0.4 pence per
ordinary share was paid on 18 October 2024 (2023: 0.4 pence paid
on 27 October 2023). Subject to approval at the 2025 AGM, a final
dividend of 2.0 pence for the year ended 31 December 2024 will
be paid on 29 May 2025 (2023: 0.8 pence paid on 28 May 2024)
to shareholders on the register of members at close of business
on 22 April 2025. The total dividend paid for the year will therefore
be 2.4 pence per ordinary share (2023: 1.2 pence).
Dividends and other distributions
The Company may, by ordinary resolution, from time to time,
declare dividends not exceeding the amount recommended by
the Board. Subject to the Companies Act 2006, the Board may
pay interim dividends, and also any fixed rate dividend, whenever
the financial position of the Company, in the opinion of the Board,
justifies its payment.
If the directors act in good faith, they are not liable for any loss
that shareholders may suffer because a lawful dividend has
been paid on other shares which rank equally with or behind
their shares.
The Board may withhold payment of all or any part of any
dividends or other monies payable in respect of the Company’s
shares from a person with a 0.25% or more interest in a class of
the Company’s shares, if such a person has been served with
a restriction notice after failure to provide the Company with
information concerning interests in those shares required to be
provided under the Companies Act 2006.
Share capital
Further to approval by shareholders at the 2024 AGM, on 16 May
2024 the Company reduced the nominal value of its 278,348,885
ordinary shares in issue at that date from £0.50 to £0.01. The
reduction was completed by subdividing each £0.50 ordinary
share in issue into one ordinary share of £0.01 and one deferred
share of £0.49. All deferred shares were then bought back for
total aggregate consideration of £0.01 and cancelled on 20 May
2024. The Company’s issued ordinary share capital therefore
remained unchanged immediately after the transaction (and each
shareholder’s proportionate interest in the share capital of the
Company remained unchanged). Aside from the change in nominal
value, the rights attaching to the ordinary shares (including
voting and dividend rights and rights on a return of capital)
remain unchanged.
As announced on 21 August 2024 the Company began a £10m
on-market share buyback programme on 27 August 2024.
Shares were purchased by Panmure Liberum Limited from
commencement until 19 September 2024 and then by Investec
Bank PLC until completion on 13 November 2024. A total of
9,718,950 shares were purchased and subsequently cancelled.
The issued share capital of the Company as at 31 December 2024
was £2,687,660.87, consisting of 268,766,087 ordinary shares of
£0.01 each. Further details of the share capital of the Company
can be found in note 22 on page 181.
The awards granted in April 2021 under the 2014 Long-Term
Incentive Plan (LTIP) matured as at 31 December 2023, resulting
in 74.5% vesting. Details regarding the vesting of the 2021 LTIP
awards can be found in the Directors’ Remuneration Report on
pages 106 and 118. Details regarding the 2022 LTIP awards that
are due to vest in April 2025 can also be found in the Directors’
Remuneration Report on page 109.
There were no share options granted under the Company’s Save
As You Earn (SAYE) Scheme in 2021, therefore, no SAYE Scheme
maturity took place in 2024. In October 2024, a grant of 4,003,701
shares was made under the SAYE Scheme. Further details of
the SAYE Scheme can be found on page 119 in the Directors’
Remuneration Report.
The directors of the Company present their report
together with the audited consolidated accounts
for the year ended 31 December 2024.
121Strategic ReportOverview Governance Financial Statements
Directors’Report continued
At the 2022 AGM, shareholders approved the renewal of the scrip
dividend scheme which authorises the directors to offer and allot
ordinary shares in lieu of cash dividends to those shareholders
who elect to participate in the scrip dividend. This authority was
granted for a period of three years (until the conclusion of the
2025 AGM), which is in line with the guidelines of the Investment
Association (IA) requiring shareholder approval to be sought to
renew the directors’ authority to offer a scrip dividend scheme at
least once every three years. Shareholder approval will therefore
be sought to renew the directors’ authority to offer a scrip
dividend scheme at the 2025 AGM. Further information on the
scrip dividend scheme is set out on page 189. Details about joining
the scrip dividend scheme, including the scrip dividend mandate
form, can be found on the Company’s website at www.costain.com.
The following ordinary shares were issued in 2024:
Purpose Recipient
Number
of shares
Nominal
value
LTIP awards Employee share trust 1,630,000 £815,000
1
Scrip dividend
scheme
Scrip participants 136,152 £1,361.52
2
1 Nominal value of shares at time of issue £0.50.
2 Nominal value of shares at time of issue £0.01.
Restrictions on transfer of securities
There are no restrictions on the transfer of securities in the
Company, except:
• that certain restrictions may from time to time be imposed by
laws and regulations (for example, insider trading laws); and
• pursuant to the Company’s Share Dealing Code, whereby
the directors and certain employees of the Company require
the approval of the Company to deal in the Company’s
ordinary shares.
The Company is not aware of any agreements between holders
of securities that may result in restrictions on the transfer
of securities.
Major shareholders
As at 31 December 2024, the Company had been notified, under the Disclosure Guidance and Transparency Rules issued by the Financial
Conduct Authority (DTR5), of the following notifiable interests in its ordinary share capital (details as at the date of notification):
Shareholder Date of notification
Number of
shares/voting
rights
% of
voting rights
Number of
shares/voting
rights attaching
to financial
instruments
% of
voting rights
Aggregate %
voting rights
J O Hambro Capital Management Limited 21.01.2021 27,250,190 9.91 n/a n/a 9.91
Ennismore Fund Management Limited 12.12.2024 21,427,829 7.97 n/a n/a 7.97
KBI Global Investors Ltd* 13.05.2020 7,258,503 6.70 n/a n/a 6.70
Gresham House Asset Management Limited 23.09.2020 15,018,286 5.46 n/a n/a 5.46
Artemis Investment Management LLP 02.06.2020 8,469,850 3.08 n/a n/a 3.08
* Notification prior to the capital raising completed 29 May 2020 (i.e. when the issued share capital was 108,283,074 ordinary shares).
The Company did not receive any notifications pursuant to DTR5 in the period from 31 December 2024 to the date of this report
(being a date not more than one month prior to the date of the Company’s Notice of AGM).
Costain Group PLC | Annual Report and Accounts 2024
122
Rights and obligations attaching to shares
In accordance with the articles of association, the Company
can issue shares with any rights or restrictions attached to
them provided such rights or restrictions do not restrict any
rights or restrictions attached to existing shares. These rights or
restrictions can be decided either by ordinary resolution passed
by the shareholders or by the directors as long as there is no
conflict with any resolution passed by the shareholders. Subject
to the articles of association, the Companies Act 2006 and
other shareholders’ rights, the issue of shares is at the disposal
of the Board.
Authority to issue shares
The directors may only issue shares if authorised to do so by the
articles of association or the shareholders in general meeting.
At the Company’s AGM held on 16 May 2024, shareholders
granted an authority to the directors to allot ordinary shares
up to an aggregate nominal amount of £922k.
This authority is due to expire at the end of the upcoming AGM
or, if earlier, at close of business on 16 August 2025. Therefore,
shareholders will be asked to renew and extend the authority
given to the directors at the last AGM, to allot shares in the
Company, or grant rights to subscribe for, or to convert any
security into, shares in the Company for the purposes of Section
551 of the Companies Act 2006. Further details on the resolution
are provided in the Notice of this year’s AGM.
Disapplication of pre-emption rights
If the directors wish to allot new shares and other equity
securities, or sell treasury shares, for cash (other than in
connection with an employee share scheme) company law
requires that these shares are offered first to shareholders
in proportion to their existing holdings. There may be occasions,
however, when the directors need the flexibility to finance
business opportunities by the issue of shares without a
pre-emptive offer to existing shareholders. This cannot be done
under the Companies Act 2006 unless the shareholders have first
waived their pre-emption rights.
At the forthcoming AGM, shareholders will be asked to pass two
special resolutions to grant the directors powers to disapply
shareholders’ pre-emption rights under certain circumstances.
Further details on the resolutions are provided in the Notice of
this year’s AGM.
Power in relation to the Company buying back
its own shares
The directors may only buyback shares if authorised to do so
by the articles of association or by a special resolution of the
shareholders at a general meeting. Any shares which have been
bought back may be held as treasury shares, and either be resold
for cash, cancelled (either immediately or in the future), or used
for the purposes of the Company’s employee share schemes.
Any cancelled treasury shares will thereby reduce the amount
of the Company’s issued share capital.
The Company undertook a buyback programme in 2024, and
a total 9,718,950 shares were purchased and subsequently
cancelled. The Company did not buyback any shares during the
period from 1 January 2025 to the date of this report.
At the forthcoming AGM, authority will again be sought from the
shareholders to grant authority for the Company to repurchase up
to 10% of the issued share capital of the Company. Further details
on the resolution are provided in the Notice of this year’s AGM.
Securities carrying special rights
No person holds securities in the Company carrying special rights
with regard to control of the Company.
Restrictions on voting
No member shall be entitled to vote at any general meeting or
class meeting in respect of any share held by them if any call or
other sum then payable by them in respect of that share remains
unpaid or if a member has been served with a restriction notice
(as defined in the articles of association) after failure to provide
the Company with information concerning interests in those
shares required to be provided under the Companies Act 2006.
The Company is not aware of any agreement between holders
of securities that may result in restrictions of voting rights.
Employee Share Trust
As at 31 December 2024, JTC Share Plan Trustee (Guernsey)
Limited (formally known as Buck Trustees (Guernsey) Limited),
as trustee of the Costain Group Employee Trust, held 1.53%
(2023: 1.40%) of the issued share capital of the Company on
trust for the benefit of those employees who exercise their share
awards/options under the Company’s LTIP, Share Deferral Plan
and SAYE Scheme (the latter in respect of ‘good leavers’ who
leave the employment of the Company before their contract
matures). For details of share-based payments see note 21
on pages 179 to 180. The trustee does not exercise any right
to vote or to receive a dividend in respect of its shareholding.
123Strategic ReportOverview Governance Financial Statements
Directors’Report continued
Amendment of articles of association
Unless expressly specified to the contrary in the articles of
association of the Company, the Company’s articles of association
may be amended by special resolution of the Company’s
shareholders. A copy of the articles of association is available
on the Company’s website at www.costain.com.
Political donations
No political donations were made during the year ended
31 December 2024 (2023: nil). The Company has a policy of not
making donations to political organisations. As a precautionary
measure, shareholder approval is being sought at the forthcoming
AGM for the Company and its subsidiaries to make donations and/
or incur expenditure which may be construed as ‘political’ by the
wide definition of that term included in the relevant legislation.
Further details on the resolution are provided in the Notice of
this year’s AGM.
Independent auditor
PricewaterhouseCoopers LLP (PwC) were reappointed as auditor
of the Company at the 2024 AGM. The Board is proposing the
reappointment of PwC as auditor from the conclusion of the AGM
in May 2025 until the conclusion of the next general meeting at
which the accounts are laid before the Company. See page 90 of
the Audit and Risk Committee Report and the Notice of this year’s
AGM, available on the Company’s website at www.costain.com,
for further details.
Financial instruments
Details of the Group’s use of financial instruments, together
with information on policies and exposure to price, liquidity,
cash flow, credit, interest rate and currency risks, can be found
in note 18 on pages 170 to 174. All information detailed in this
note is incorporated into the Directors’ Report by reference and
is deemed to form part of the Directors’ Report.
Significant agreements – change of control
The directors are not aware of any significant agreements to
which the Company and/or any of its subsidiaries or associates
are a party that take effect, alter or terminate upon a change of
control of the Company following a takeover bid, save in respect
of the facility agreements relating to the Company’s banking
and surety bonding facilities, which would become terminable
upon a change of control. There are no agreements between
the Company and its directors or employees providing for
compensation for loss of office or employment as a result of a
successful takeover bid except that provisions of the Company’s
employee share schemes and plans may cause options and
awards to be granted to employees under such schemes and
plans to vest on a takeover.
Events after the reporting date
There are no reportable events after the reporting date.
Research and development
The Group is involved in research and development in its
Highways, Integrated Transport, Aviation, Energy, Defence,
Water and Rail sectors. The Group’s engineers and technical staff
in these sectors seek to develop and deliver technical advances,
for example in hydrogen, decarbonisation, carbon capture and
use of 3D printed solutions (see pages 5, 10, 16 to 17, 20 to 21 and
the operational review on pages 24 to 29). In undertaking certain
elements of this research and development work, the Group is
supported by arrangements with certain British universities and
various technology specialists.
Greenhouse gas emissions
Pages 41 to 43 of the Strategic Report detail the greenhouse
gas emissions disclosures required by the Companies Act 2006
(Strategic Report and Directors’ Report) Regulations 2013.
This information is incorporated by reference into (and shall be
deemed to form part of) this report.
Information required by UKLR 6.6.1R
There is no further information required to be disclosed
under UKLR 6.6.1R.
Overseas interests
Details of the Company’s overseas subsidiary undertakings can
be found in note 24 on pages 182 to 185 The Company has one
overseas branch in Abu Dhabi.
Directors
Biographies of the Board are given on pages 58 and 59 and
include details of the skills, competencies and a brief career
history of directors in post as at the date of this report and the
Committees on which they serve. As announced on 12 March 2024
Bishoy Azmy, non-executive director, stepped down from the
Board on 31 March 2024.
The directors shall be not less than two and not more than 18
in number. The Company may by ordinary resolution vary the
minimum and/or maximum number of directors.
Appointment and replacement of directors
The appointment and replacement of directors is governed by the
Company’s articles, the 2018 UK Corporate Governance Code, the
Companies Act 2006 and related legislation. The articles may be
amended by a special resolution of the Company’s shareholders.
Directors may be appointed by the Company by ordinary
resolution or by the Board. At every AGM of the Company,
all directors are required to retire from office and may offer
themselves for reappointment by the members.
The Board, or any Committee authorised by the Board, may
from time to time appoint one or more directors to hold any
employment or executive office for such period and on such terms
as they may determine and may also revoke or terminate any
such appointment.
Costain Group PLC | Annual Report and Accounts 2024
124
The Company may, by special resolution, remove any director
before the expiration of their period of office. The office of a
director shall also be vacated under a number of situations which
are set out in the articles of the Company. These include a director
wishing to resign, being required to step down due to ill health,
becoming bankrupt or being prohibited by law from being
a director.
The executive directors have contracts of employment with the
Company, terminable on 12 months’ notice, while the chair and
non-executive directors all have letters of appointment with
the Company terminable on three months’ and one month’s
notice respectively. An independent non-executive director’s
appointment is for an initial period of three years, at the expiry
of which, the appointment is reviewed to determine whether
the appointment should continue.
All contracts and letters of appointment are available for
inspection at the Company’s registered office, by appointment,
during normal business hours.
Directors’ conflicts of interest
The Company has procedures in place for managing conflicts
of interest. Directors are required to declare all external
appointments or relationships with other companies and the Board
has adopted appropriate processes to manage and, if appropriate,
approve any such appointment or relationship which could result
in a possible conflict of interest. The Board has satisfied itself
that there is no compromise to the independence of the directors
who have appointments on the boards of, or relationships with,
other companies. The Board has approved the actual or potential
situational conflicts of interest of Kate Rock, a director of Keller
Group plc, of Tony Quinlan, a director of Hill & Smith Holdings PLC,
and as of 1 January 2025 of Steve Mogford, a director of Intertek
Group plc, all non-material suppliers to the Company in terms of
value of goods and services.
Powers of the directors
Subject to the Company’s articles of association, the Companies
Act 2006 and any directions given to the Company by special
resolution, the business of the Company will be managed by the
Board, which may exercise all the powers of the Company. In
particular, the Board may exercise all the powers of the Company
to borrow money, to guarantee, to indemnify, to mortgage or
charge any of its undertakings, property, assets (present and
future) and uncalled capital and to issue debentures and other
securities and to give security for any debt, liability or obligation
of the Company or of any third party.
Directors’ interests
No director had any material interest in any contract of
significance with the Group during the period under review.
Details of directors’ emoluments and interests in shares (including
their connected persons’ beneficial interests) in the Company,
including any changes in interests during 2024, are contained
in the Directors’ Remuneration Report, which appears on pages
94 to 120.
Directors’ indemnity
Costain Group PLC maintains liability insurance for its directors
and officers. There are no subsisting indemnities in favour of its
directors during 2024.
Diversity
Details of the Company’s policy on diversity and inclusion
within the business (including at Board level), are provided
in the Governance Report on pages 78 and 79 and the
Nomination Committee Report on page 92 Apart from ensuring
that an individual has the ability to carry out a particular role,
the Company does not discriminate in any way. The Company
endeavours to retain employees if they become disabled,
making reasonable adjustments to their role and, if necessary,
looking for redeployment opportunities within the Group.
The Company also ensures that training, career development
and promotion opportunities are available to all employees
irrespective of gender, race, age or disability.
Employee information
The average number of employees within the Company and Group
is shown in note 6 to the financial statements on page 159.
The Company maintains a strong communication network
and employees are encouraged to discuss with directors and
management matters of interest and issues affecting the day-
to-day operations of the Group. Regular employee engagement
surveys are run by the Company, the results of which are
communicated to employees (see page 83).
Employees are also kept informed of the financial and economic
factors affecting the Company’s performance, the strategy and
other matters of concern to them as employees, through various
means including regular leadership briefings and blogs from the
chief executive officer and other senior managers and via the
Company’s intranet site. Employees also have the opportunity to
provide feedback and ask questions when directors and senior
managers visit sites, at employee webinars, as well as via the
employee forum ‘Your Voice’ (see pages 82 to 85 for engagement
with workforce).
The Company operates, when considered appropriate, an
all-employee share plan (the SAYE Scheme) enabling employees
to become shareholders and build a stake in the future success
of the Company. As mentioned on pages 96 and 119, a grant was
made under the SAYE Scheme in 2024.
Further information on the Company’s approach to investing
in and rewarding its workforce can be found on pages 84 and 85.
125Strategic ReportOverview Governance Financial Statements
Stakeholder engagement
For more information on how the directors have engaged with the
workforce, customers, suppliers and others, and how the directors
have had regard to their interests, and the effect of that regard
including on principal decisions, see the stakeholder engagement
section (Section 172) on pages 74 to 77 and the workforce
engagement section on pages 82 to 85 of the Governance Report.
Additionally, the Company engages with subcontractors via
the twice-yearly safety, health and environment (SHE) impact
days, meet the delivery partner events and monthly leadership
engagement visits to projects and sites.
Additional information regarding the Company’s charitable giving
can be found on pages 31 and 35.
Essential contracts or other arrangements
Given the scope and diversity of the Company’s activities,
the Company does not consider that it has contractual or other
arrangements which are essential to the business of the Group
and which are required to be disclosed.
Transactions with related parties
Transactions between the Company, its subsidiaries (where
not exempted by FRS 101), joint ventures and associates, joint
operations, the Costain Pension Scheme and with its directors and
executive officers, which are related parties are set out in note 25
to the financial statements on page 186. There have been no other
related party transactions during the year.
Disclosure of information to auditor
Each of the directors confirms that, so far as they are aware,
there is no relevant audit information (as defined in Section 418
of the Companies Act 2006) of which the Group’s and Company’s
external auditor is unaware and that each director has taken all
the steps that they ought to have taken as a director to make
themself aware of any relevant audit information and to establish
that the Group’s and Company’s external auditor is aware
of that information.
This confirmation is given and should be interpreted in accordance
with the provisions of Section 418 of the Companies Act 2006.
By Order of the Board
Nicole Geoghegan
Company Secretary
10 March 2025
Directors’Report continued
Costain Group PLC | Annual Report and Accounts 2024126
Statement of directors’ responsibilities
in respect of the financial statements
The directors are responsible for preparing the annual report
and accounts and the financial statements in accordance with
applicable law and regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group financial statements in accordance with
UK-adopted international accounting standards and the Company
financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 ‘Reduced Disclosure Framework’,
and applicable law).
Under company law, directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the
profit or loss of the Group for that period. In preparing the financial
statements, the directors are required to:
• select suitable accounting policies and then apply
them consistently
• state whether applicable UK-adopted international accounting
standards have been followed for the Group financial
statements and FRS 101 has been followed for the Company
financial statements, subject to any material departures
disclosed and explained in the financial statements
• make judgements and accounting estimates that are reasonable
and prudent and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Company will continue in business.
The directors are responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
Group’s and Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and
Company and enable them to ensure that the financial statements
and the Directors’ Remuneration Report comply with the
Companies Act 2006.
The directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ confirmations
The directors consider that the annual report and accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
and Company’s position and performance, business model
and strategy.
Each of the directors, whose names and functions are listed in the
Governance section confirm that, to the best of their knowledge:
• the Group financial statements, which have been prepared
in accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities,
financial position and profits or losses of the Group;
• the Company financial statements, which have been prepared in
accordance with FRS 101, give a true and fair view of the assets,
liabilities and financial position of the Company; and
• the Strategic Report includes a fair review of the development
and performance of the business and the position of the Group
and Company, together with a description of the principal risks
and uncertainties that they face.
By Order of the Board
Nicole Geoghegan
Company Secretary
10 March 2025
Directors’ResponsibilityStatement
127
Strategic ReportOverview Governance Financial Statements
Independentauditors’reporttothemembersofCostainGroupPLC
Report on the audit of the financial statements
Opinion
In our opinion:
• Costain Group PLC’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair
view of the state of the Group’s and of the Company’s affairs as at 31 December 2024 and of the Group’s profit and the Group’s cash
flows for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards as
applied in accordance with the provisions of the Companies Act 2006;
• the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”, and applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the annual report and accounts (the “annual report”), which comprise:
the Consolidated Statement of Financial Position and the Company Statement of Financial Position as at 31 December 2024; the
Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in
Equity, the Company Statement of Changes in Equity and the Consolidated Cash Flow Statement for the year then ended; and the
notes to the financial statements, comprising material accounting policy information and other explanatory information.
Our opinion is consistent with our reporting to the Costain Group PLC Audit and Risk Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 5, we have provided no non-audit services to the Company or its controlled undertakings in the
period under audit.
Our audit approach
Overview
Audit scope
• The Group is primarily UK based and has two main segments; Transportation and Natural Resources. We have identified two legal
entities as significant audit components, either due to their size or their risk characteristics. Additionally, we scoped one other legal
entity as a non-significant component requiring full scope audit procedures and two legal entities as non-significant components
requiring an audit of certain account balances, to achieve the desired coverage over all financial statement areas. We identified 30
inconsequential components for the Group audit.
Key audit matters
• Contract accounting (Group)
• Impairment of Goodwill (Group)
• Presentation of the Group’s financial performance (Group)
• Carrying value of investments in Group companies (Parent)
Materiality
• Overall Group materiality: £5,500,000 (2023: £5,300,000) based on professional judgement (equivalent to 0.44% of the Group’s
revenue (2023: based on 0.4% of Group revenue)).
• Overall Company materiality: £2,360,000 (2023: £2,380,000) based on 1% of total assets.
• Performance materiality: £4,125,000 (2023: £3,975,000) (Group) and £1,770,000 (2023: £1,785,000) (Company).
Thescopeofouraudit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Costain Group PLC | Annual Report and Accounts 2024
128
Keyauditmatters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The water contract rectification provision and associated insurance recovery (Group), which was a key audit matter last year, is no
longer included because of the reduction in audit risk and estimation associated with the rectification provision and the related insurance
receivable. Otherwise, the key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Contract accounting (Group)
Refer to page 88 (Audit and Risk Committee Report), pages
144 to 153, note 2 (Summary of significant accounting policies,
material areas of judgement and estimation).
The Group has significant long-term contracts in its
Transportation and Natural Resources divisions. The
recognition of revenue in relation to long term construction
contracts is in accordance with IFRS 15 and is based on
either the measure of progress calculated using the stage
of completion (determined by the cost incurred to date as
a proportion of total estimated cost) or as costs/time are
incurred for activity based contracts. Greater audit effort is
directed towards those long term contracts that recognise
revenue by reference to the stage of completion given the
increased estimation required.
Profit or losses on stage of completion contracts is a
significant risk for our audit because of the inherent
uncertainty in preparing estimates of the forecast costs and
revenues on contracts. An error in the contract forecast could
result in a material variance in the amount of profit or loss
recognised to date and, therefore, the current financial year.
The Group’s portfolio of contracts typically use standard
forms of construction contracts, however, given the complex
nature and programmes of work undertaken, certain contracts
are further tailored to include, for example, incentive or other
mechanisms that require estimates to be made.
These estimates include but are not limited to project or alliance
pain/gain mechanisms and programme and cost incentives.
These estimates also include the determination of the
expected recovery of costs arising from, for example,
variations to the contract requested by the customer,
compensation events, and claims made both by and against
the Group for delays or other additional costs arising or
projected to arise.
The Group’s accounting policy is to recognise additional
contractual amounts receivable from customers only when
these amounts are considered ‘highly probable of no
significant reversal’.
On the basis of the significant estimates, judgements and
inherent uncertainty involved in determining the appropriate
revenue recognition and associated profit, we identified
Contract Accounting as a Key Audit Matter and were
particularly focused on the existence/occurrence and
accuracy of revenue recognition.
We focused our work on those contracts with the greatest estimation
uncertainty and requiring the most judgement over the final contract
values and, therefore, profit outcome. We selected risk based contracts on
a targeted basis for our testing, based on both quantitative and qualitative
criteria, including:
• contracts with high levels of revenue recognised in the year;
• low margin or loss making contracts;
• contracts with significant balance sheet exposure, in particular high levels
of contract assets; and
• contracts identified with higher risk criteria through our discussions with
management, review of board minutes, review of legal reports and review
of publicly available information.
Our audit procedures were tailored according to the specific risk profile of
each contract and included, but were not limited to, the following procedures:
• Obtaining an understanding of the relevant contractual clauses and terms
and conditions and agreeing forecast revenue to signed contracts, signed
variations, agreed compensation events or other corroborative and
supporting documentation;
• Challenging management’s forecasts, in particular the appropriateness
of key assumptions, including the expected recovery of variations,
claims and compensation events from clients, as well as pain/gain
mechanisms and other related contract incentives, to determine the
basis on which the associated revenue was considered to be ‘highly
probable’ of not reversing;
• Challenging those assumptions in respect of estimated recoveries from
subcontractors, designers, and insurers included in the forecasts, to
determine their recoverability;
• Substantively testing a sample of actual costs incurred to date to check
that these had been recorded accurately;
• Performing a margin analysis on the end-of-life forecasts to assess the
performance of the contract portfolios year on year;
• Inspecting correspondence and/or meeting minutes with customers
concerning variations, claims and compensation events, and obtaining
third-party assessments of these from legal or technical experts
contracted by the Group, if applicable, to assess whether this information
was consistent with the estimates made;
• Reconciling revenue recognised with amounts applied for and amounts
certified by clients, agreeing the amounts received to cash to ensure any
reconciling items were appropriate;
• Agreeing forecast costs to complete to supporting evidence (such as
orders signed with subcontractors, performing look back testing and
assessing the appropriateness of forecast run rates) and applying
historical cost run-rates to challenge the completeness and accuracy of
the forecast costs to complete, including any cost contingencies held;
• Assessing management’s estimates and any associated risks in relation to
forecasts of disallowed costs or actual withheld costs and the associated
impact on the project’s forecast outturn.
129Strategic ReportOverview Governance Financial Statements
Key audit matter How our audit addressed the key audit matter
• Assessing the recoverability of balance sheet items (in particular contract
assets), by obtaining evidence of the value of work performed and, where
applicable, comparing this to subsequent invoicing and cash receipts;
• For the residual contract population (‘the tail’), performing targeted risk
based procedures including, testing of contract assets/liabilities, cost
to come forecasts, and any material unagreed change, reviewing the
contract forecast report for unusual items, and recalculating the revenue
based on percentage of completion;
• Where relevant, assessing the potential impact of other identified risks
including the impact of inflation and climate change related costs on the
revenue; and
• Considering the adequacy of the disclosures in the financial statements
in relation to specific contracts and also the disclosures in respect of
significant judgements and estimates.
Based on all of the evidence obtained from the above procedures, we
concluded that the recognition of contract revenues and profits/losses was
appropriate. We also reviewed the disclosures of estimation uncertainty in
relation to significant ongoing contracts included in the financial statements
and satisfied ourselves that these were appropriate.
Impairment of Goodwill (Group)
Refer to page 88 (Audit and Risk Committee Report), pages
144 to 153, note 2 (Summary of significant accounting policies
– material areas of judgement and estimation), and page 163
note 12 – Intangible Assets.
At 31 December 2024, the Group had £45.1m of goodwill
(2023: £45.1m). Goodwill has been allocated to the applicable
Cash Generating Units (CGUs) of the Transportation division:
£15.5m (2023: £15.5m) and the Natural Resources division:
£29.6m (2023: £29.6m). The carrying value of goodwill is
contingent on future cash flows and there is a risk that
the assets will be impaired if these cash flows do not meet
the Group’s forecast projections. The impairment reviews
performed by the Group contain a number of judgements and
estimates including discount rates, growth rates and expected
changes to operating margins during the forecast periods.
In particular the cash flows include estimation uncertainty
primarily in respect of the amount of work that is currently
unsecured (work to be obtained). Changes in the assumptions
outlined above could potentially lead to an impairment in the
carrying value of assets.
We determined there to be a risk that the carrying value of
goodwill allocated to the Natural Resources and Transportation
divisions may not be supportable when compared to their
recoverable amounts, given the level of uncertainty in
future cash flows, primarily in respect of the amount of
unsecured revenue that is included in the cash flow forecasts.
Accordingly, we determined this to be a Key Audit Matter.
We obtained management’s cash flow forecasts, which were consistent with
the Board approved budget and business plan. We evaluated management’s
basis for determining the relevant CGUs for Goodwill testing purposes as the
Transportation and Natural Resources divisions. In evaluating management’s
impairment assessment for goodwill in respect of the CGUs our audit
procedures included, but were not limited to the following:
• Agreeing the short term cash flow forecasts to the latest Board
approved budgets and forecasts for the period from FY25-FY28, testing
the integrity of the underlying calculations and assessing how both
internal and external drivers of performance were incorporated into the
projections;
• Testing certain contracts in the Group’s pipeline to validate the associated
secured and to be obtained revenue forecast included in the model and
challenging the short term growth forecasts assumed by management,
including assumptions relating to working capital movements;
• Challenging management’s forecasts and comparing future cash flow
performance to historic levels as part of our assessment as to whether
the forecast performance was considered achievable;
• Challenging and verifying the allocation of central costs and assets to
the divisions, and ensuring that these were allocated on a reasonable and
consistent basis;
• Performing sensitivity analysis in respect of the key drivers of the cash
flow forecasts, in particular assessing the extent to which changes
in growth rates and operating margin assumptions could lead to an
impairment;
• Assessing and where appropriate, challenging, the discount rate and long
term growth rates, with the support of our valuations experts; and
• Undertaking stress testing of management’s forecasts and assessing
whether any reasonably possible changes in assumptions would give rise
to an impairment, and ensuring that, where appropriate, disclosures were
made in accordance with IAS 36, ‘Impairment of Assets’.
We concluded that management’s assessment that no impairment was
required and that the carrying value of goodwill in the Natural Resources or
Transportation divisions was supportable, was appropriate.
Independentauditors’reporttothemembersofCostainGroupPLC continued
Costain Group PLC | Annual Report and Accounts 2024130
Key audit matter How our audit addressed the key audit matter
Presentation of Group’s financial performance (Group)
Refer to page 88 (Audit and Risk Committee Report), and
pages 154 and 155 note 3 (Reconciliation of reported
operating profit to adjusted operating profit).
Consistent with the prior year, the Directors present in note 3
to the accounts, the Group’s principal Alternative Performance
Measure (APM) as ‘Adjusted Operating Profit’ such that the
Group’s APM is consistent with how management reviews the
performance of the business.
The Group’s adjusted operating profit from operations of
£43.1m is stated after charging:
• (£0.1m) of restructuring costs;
• £5.4m of transformation costs; and
• £6.7m of fire safety costs.
The determination of which items are treated as ‘adjusted’
is judgemental and needs to be consistent with the
Group’s accounting policy and how the Directors review
the performance of the business. Users of the financial
statements could be misled if amounts are not classified and
disclosed in a transparent manner and consistent with the
way in which the Board reviews and monitors performance.
In view of the quantum of adjusting items for FY24 we
determined this to be a Key Audit Matter.
We considered whether the items included in determining the presentation of
Adjusting Operating Profit were appropriate. Our audit procedures included,
but were not limited to the following:
• Obtaining the latest internal Board reporting to evaluate whether the
nature and quantum of the adjustments presented by management to the
Board, was consistent with those highlighted as adjusted in the financial
statements;
• Ensuring that the Group’s APMs were appropriately reconciled to the
relevant statutory measures;
• Reviewing the definition and classification of adjusting items in the
Group’s annual report and assessing whether the costs presented were
classified as adjusting items in line with the Group’s accounting policy.
This included:
• Critically assessing and sample testing whether the items attributable
to the Transformation programme were appropriately classified and
represented incremental expenditure to the Group;
• Ensuring that the costs relating to fire safety represented amounts that
were unrelated to the ongoing activities of the Group and are expected
to be non-recurring in nature.
Based on these procedures we were satisfied with the presentation of the
Group’s profit before adjusting items and that the reasons for the use of this
APM have been appropriately disclosed and are consistent with the Group’s
accounting policy. We also considered whether there was appropriate balance
in the Group’s annual report between references to adjusted profit measures
and the Group’s statutory profit and were satisfied that this was the case.
Carrying value of investments in Group companies (parent)
The Company holds investments in subsidiaries of £157.9m
(2023: £155.6m) as disclosed in note 14 on pages 165 to 167.
Management has performed an assessment to identify if
impairment indicators exist in respect of the carrying value of
the Company’s investments in subsidiaries that would trigger the
requirement for a full impairment assessment to be performed.
The Directors concluded that, at the balance sheet date,
there were no indicators of impairment that would trigger the
requirement for a full impairment assessment to be performed.
This area was identified as a Key Audit Matter given the
materiality of these balances.
In evaluating the Directors’ assessment of impairment indicators in respect of
the carrying value of investments, our audit procedures included, but were not
limited to the following:
• Assessing the accounting policy for investments in subsidiaries to ensure
this was compliant with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework”, and applicable law); and
• Obtaining management’s assessment of impairment indicators in respect
of the carrying value of the Company’s investments in subsidiaries and
validating the conclusions reached by management that no impairment
indicators exist that would trigger the requirement for an impairment
assessment to be performed.
We determined that management’s conclusion, that at the balance sheet date
there were no impairment indicators that would trigger the requirement for a
full impairment assessment to be performed, was reasonable.
Howwetailoredtheauditscope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in
which they operate.
The Group is primarily UK based and has two main segments; Transportation and Natural Resources. In establishing the overall approach
to the Group audit, we determined the type of work needed to be performed at these reporting units. We identified the following legal
entities as significant components; Costain Limited (financially significant component) and Costain Engineering and Construction Limited
(significant component due to risk). We have identified one non-significant component, Costain Group PLC, which required an audit of
its entire financial information, given it is the parent company of the Group. In addition, we performed work over specific balances in two
other non-significant component entities, Richard Costain Limited and Costain Oil, Gas & Process Limited, which in our view, required
an audit of certain account balances, either due to their size or their risk characteristics. In total, our scope accounted for 96% (2023:
98%) of Group revenues and 90% (2023: 97%) of Group profit before tax. The percentage of Group profit before tax is calculated on an
absolute basis, which aggregates component profits and losses.
131Strategic ReportOverview Governance Financial Statements
Theimpactofclimateriskonouraudit
As part of our audit we made enquiries of management to understand the process they have adopted to assess the extent of the
potential impact of climate change risk on the Group’s financial statements. Management considers that the impact of climate change
does not give rise to a material financial statement impact. We used our knowledge of the Group to evaluate management’s assessment.
We particularly considered how climate change risks would impact the assumptions made in the forecasts prepared by management
used in their estimates and judgements in respect of long-term contract accounting and impairment analyses. We also considered the
consistency of the disclosures in relation to climate change made in the other information within the annual report with the financial
statements and our knowledge from our audit.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group Financial statements – Company
Overall materiality
£5,500,000 (2023: £5,300,000). £2,360,000 (2023: £2,380,000).
How we determined it
Professional judgement (at equivalent to
0.44% of the Group's revenue) (2023: based
on 0.4% of the Group’s revenue).
1% of total assets (2023: based on 1% of
total assets).
Rationale for benchmark applied
We considered different benchmarks based
on a number of profit measures and revenue,
taking into account the performance of the
business over the last few years and the
overall scale of the business. This gave us a
range within which to determine materiality.
Based on our professional judgement, we
concluded that an amount of £5.5m was
appropriate, which represents approximately
0.44% of the Group’s revenue.
The parent company primarily holds cash,
investments in subsidiaries and intercompany
payables. There are no trading activities in the
Company, therefore, we considered a balance
sheet measure to be the most appropriate
auditing benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range
of materiality allocated across full-scope components was between £4.6m and £4.9m. Certain components were audited to a local
statutory audit materiality that was also less than our overall Group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit
and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample
sizes. Our performance materiality was 75% (2023: 75%) of overall materiality, amounting to £4,125,000 (2023: £3,975,000) for the Group
financial statements and £1,770,000 (2023: £1,785,000) for the Company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Costain Group PLC Audit and Risk Committee that we would report to them misstatements identified during our
audit above £275,000 (Group audit) (2023: £280,000) and £118,000 (Company audit) (2023: £119,000) as well as misstatements below
those amounts that, in our view, warranted reporting for qualitative reasons.
Independentauditors’reporttothemembersofCostainGroupPLC continued
Costain Group PLC | Annual Report and Accounts 2024132
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of
accounting included:
• assessing the appropriateness of cash flow and liquidity forecasts as well as forecasts of covenant compliance in relation to the
Group’s banking facilities which extend until September 2026;
• understanding and assessing the appropriateness of the key assumptions used both in the base case and in the Directors’ severe but
plausible downside scenario, including assessing whether we considered the downside sensitivities to be appropriately severe;
• corroborating key assumptions to underlying documentation (e.g. by comparing forecast sales growth to levels of future revenue that
have been secured) and ensuring this was consistent with our audit work in these areas;
• testing the mathematical accuracy of management’s cash flow models and examining the minimum committed facility headroom under
the base case cash flow forecasts and sensitised cases;
• obtaining and reperforming the Group’s forecast covenant compliance calculations, including sensitising the forecasts of liquidity
and profitability to assess the potential impact of downside sensitivities on future covenant compliance, taking into account terms
specifically defined in the covenant agreements;
• evaluating whether the Directors’ conclusion that liquidity and covenant headroom remained in all these scenarios was reasonable;
and
• reviewing and assessing the disclosures provided relating to the going concern basis of preparation in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the
Company’s ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.
Reporting on other information
The other information comprises all of the information in the annual report other than the financial statements and our auditors’ report
thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required
to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement
of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
StrategicreportandDirectors’report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’
report for the year ended 31 December 2024 is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we
did not identify any material misstatements in the Strategic report and Directors’ report.
Directors’Remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
133Strategic ReportOverview Governance Financial Statements
Corporate governance statement
The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing
material to add or draw attention to in relation to:
• The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the annual report that describe those principal risks, what procedures are in place to identify emerging risks and an
explanation of how these are being managed or mitigated;
• The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of
accounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue to
do so over a period of at least twelve months from the date of approval of the financial statements;
• The Directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and
why the period is appropriate; and
• The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-term viability of the Group and Company was substantially less in scope
than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking
that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our knowledge and understanding of the Group and Company and their
environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• The Directors’ statement that they consider the annual report, taken as a whole, is fair, balanced and understandable, and provides the
information necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy;
• The section of the annual report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the annual report describing the work of the Costain Group PLC Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance
with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review
by the auditors.
Independentauditors’reporttothemembersofCostainGroupPLC continued
Costain Group PLC | Annual Report and Accounts 2024134
Responsibilities for the financial statements and the audit
ResponsibilitiesoftheDirectorsforthefinancialstatements
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also
responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’responsibilitiesfortheauditofthefinancialstatements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations
related to health and safety legislation, pension obligations, data protection legislation, anti-bribery and corruption legislation,
environmental legislation, construction laws and those governed by the Financial Conduct Authority and we considered the extent to
which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have
a direct impact on the financial statements such as the Companies Act 2006 and tax legislation. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that
the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure and management bias
in accounting estimates. Audit procedures performed by the engagement team included:
• Discussion with management, internal audit and the Group’s in-house legal advisers, including consideration of known or suspected
instances of non-compliance with laws and regulations and fraud;
• Evaluation of management’s controls designed to prevent and detect irregularities;
• Review of the financial statement disclosures to underlying supporting documentation;
• Assessment of matters reported on the Group’s whistleblowing helpline and the results of management’s investigation of such matters;
• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation
to contract accounting and the presentation of the Group’s financial performance (see the related key audit matters above); and
• Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
135Strategic ReportOverview Governance Financial Statements
Independentauditors’reporttothemembersofCostainGroupPLC continued
Useofthisreport
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3
of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Otherrequiredreporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Costain Group PLC Audit and Risk Committee, we were appointed by the members on 8 May
2017 to audit the financial statements for the year ended 31 December 2017 and subsequent financial periods. The period of total
uninterrupted engagement is eight years, covering the years ended 31 December 2017 to 31 December 2024.
Othermatter
The Company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these financial
statements in an annual financial report prepared under the structured digital format required by DTR 4.1.15R – 4.1.18R and filed on the
National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no assurance over whether the structured
digital format annual financial report has been prepared in accordance with those requirements.
Andrew Paynter (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
10 March 2025
Costain Group PLC | Annual Report and Accounts 2024
136
137
Strategic ReportOverview Governance Financial Statements
ConsolidatedIncomeStatement
Year ended 31 December 2024
| 2024 | 2023 | ||
| Note(s) | £m | £m | |
| Continuing operations | |||
| Revenue | |||
Cost of sales | ( | ( | |
Gross profit | |||
Administrative expenses | ( | ( | |
Operating profit | |||
Finance income | 8 | ||
Finance expense | 8 | ( | ( |
Net finance income | |||
Profit before tax | 4/5 | ||
Taxation | 9 | ( | ( |
Profit for the year attributable to equity holders of the Parent | |||
| Earnings per share | |||
Basic | 10 | ||
Diluted | 10 |
The Consolidated Income Statement shows the income and expenses from continuing operations.
Costain Group PLC | Annual Report and Accounts 2024138
ConsolidatedStatementofComprehensiveIncome
Year ended 31 December 2024
| 2024 | 2023 | |
| £m | £m | |
Profit for the year | ||
| Items that will not be reclassified to profit or loss: | ||
| Remeasurement of retirement benefit asset | ( | ( |
Tax recognised on remeasurement of retirement benefit asset | ||
Total items that will not be reclassified to profit or loss | ( | ( |
Other comprehensive expense for the year | ( | ( |
Total comprehensive income for the year |
139
Strategic ReportOverview Governance Financial Statements
ConsolidatedStatementofFinancialPosition
As at 31 December 2024
| 2023 | |||
| 2024 | (as restated)* | ||
| Note | £m | £m | |
| Assets | |||
| Non-current assets | |||
Intangible assets | 12 | ||
Property, plant and equipment | 13 | ||
Equity accounted investments | 14 | ||
Retirement benefit asset | 21 | ||
Trade and other receivables | 16 | ||
Insurance recovery asset | 20 | ||
Deferred tax | 9 | ||
Total non-current assets | |||
| Current assets | |||
Trade and other receivables | 16 | ||
Insurance recovery asset | 20 | ||
Income tax | 9 | ||
Cash and cash equivalents – with restrictions | 17 | ||
Cash and cash equivalents | 17 | ||
Total current assets | |||
Total assets | |||
| Liabilities | |||
| Non-current liabilities | |||
Other payables | 19 | ||
Lease liabilities | 13 | ||
Total non-current liabilities | |||
| Current liabilities | |||
Trade and other payables | 19 | ||
Income tax | 9 | ||
Lease liabilities | 13 | ||
Provisions for other liabilities and charges | 20 | ||
Total current liabilities | |||
Total liabilities | |||
Net assets | |||
| Equity | |||
Share capital | 22 | ||
Share premium | |||
Translation reserve | |||
Treasury shares | ( | ( | |
Capital redemption reserve | |||
Retained earnings | |||
Total equity |
* See note 26 for more information on restatements.
Registered number: 1393773
Costain Group PLC | Annual Report and Accounts 2024140
Note
2024
£m
2023
£m
Assets
Non-current assets
Investments in subsidiaries 14
157.9 155.6
Total non-current assets 157.9 155.6
Current assets
Trade and other receivables 16
0.6 0.9
Cash and cash equivalents 17 77.5 81.8
Total current assets 78.1 82.7
Total assets 236.0 238.3
Liabilities
Non-current liabilities
Provisions for other liabilities and charges 20
0.5 0.6
Total non-current liabilities 0.5 0.6
Current liabilities
Trade and other payables 19
46.6 40.8
Income tax 9 0.2 –
Provisions for other liabilities and charges 20 0.1 0.1
Total current liabilities 46.9 40.9
Total liabilities 47.4 41.5
Net assets 188.6 196.8
Equity
Share capital 22
2.7 138.3
Share premium 16.5 16.4
Capital redemption reserve 136.5 –
Retained earnings 32.9 42.1
Total equity 188.6 196.8
The profit for the year attributable to the Company was £2.6 million (2023: £1.3 million).
The financial statements on pages 137 to 187 were approved by the Board of directors on 10 March 2025 and were signed on its behalf by:
Alex Vaughan Helen Willis
Director Director
Registered number: 1393773
CompanyStatementofFinancialPosition
As at 31 December 2024
141
Strategic ReportOverview Governance Financial Statements
ConsolidatedStatementofChangesinEquity
Year ended 31 December 2024
| Capital | |||||||
| Share | Share | Translation | Treasury | redemption | Retained | Total | |
| capital | premium | reserve | shares | reserve | earnings | equity | |
| £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2023 | |||||||
Profit for the year | |||||||
Other comprehensive expense | ( | ( | |||||
| Issue of ordinary shares under employee share | |||||||
option plans | ( | ( | |||||
Shares purchased to satisfy employee share schemes | ( | ( | |||||
Equity-settled share-based payments | |||||||
Acquisition of treasury shares | ( | ( | |||||
Dividends paid | ( | ( | |||||
At 31 December 2023 | ( | ||||||
At 1 January 2024 | ( | ||||||
Profit for the year | |||||||
Other comprehensive expense | ( | ( | |||||
| Issue of ordinary shares under employee share | |||||||
option plans | ( | ( | |||||
Shares awarded to satisfy employee share schemes | ( | ||||||
Equity-settled share-based payments | |||||||
Acquisition of treasury shares | ( | ( | |||||
Nominal value reduction (note 22) | ( | ( | |||||
Share buyback (note 22) | ( | ( | ( | ||||
Dividends paid | ( | ( | |||||
At 31 December 2024 | ( |
Details of the nature of the above reserves are set out below.
Translation reserve
The translation reserve comprises all foreign exchange differences arising after 1 January 2004, the date of adoption of IFRS, from the
translation of the financial statements of the residual, no longer trading foreign entities, as well as from the translation of liabilities that
hedge the Group’s net investment in foreign subsidiaries.
Treasury shares
Treasury shares are shares in Costain Group PLC that are held by an Employee Benefit Trust for the purpose of issuing shares under the
Costain employee share schemes (see note 21 for further information on these schemes).
Capital redemption reserve
The capital redemption reserve exists to maintain the capital of the Company and relates to share capital amounts cancelled.
Costain Group PLC | Annual Report and Accounts 2024142
CompanyStatementofChangesinEquity
Year ended 31 December 2024
Share capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Total
equity
£m
At 1 January 2023 137.5 16.4 – 40.5 194.4
Total comprehensive income – – – 1.3 1.3
Issue of ordinary shares under employee share option plans 0.8 – – (0.8) –
Equity-settled share-based payments granted to employees of subsidiaries – – – 2.2 2.2
Dividends paid – – – (1.1) (1.1)
At 31 December 2023 138.3 16.4 – 42.1 196.8
At 1 January 2024 138.3 16.4 – 42.1 196.8
Total comprehensive income – – – 2.6 2.6
Issue of ordinary shares under employee share option plans 0.9 – – (0.8) 0.1
Equity-settled share-based payments granted to employees of subsidiaries – – – 2.3 2.3
Nominal value reduction (note 22) (136.4) – 136.4 – –
Share buyback (note 22) (0.1) – 0.1 (10.0) (10.0)
Dividends paid – 0.1 – (3.3) (3.2)
At 31 December 2024 2.7 16.5 136.5 32.9 188.6
Retained earnings
The Company grants certain of its subsidiaries rights to its equity instruments as part of its share-based payment plan incentive
schemes. The impact is recognised within retained earnings.
Capital redemption reserve
The capital redemption reserve exists to maintain the capital of the Company and relates to share capital amounts cancelled.
143
Strategic ReportOverview Governance Financial Statements
| 2023 | |||
| 2024 | (as restated)* | ||
| Note(s) | £m | £m | |
| Cash flows generated from/(used by) operating activities | |||
| Profit for the year | |||
| Adjustments for: | |||
Finance income | 8 | ( | ( |
Finance expense | 8 | ||
Taxation | 9 | ||
Loss/(profit) on disposals of property, plant and equipment | ( | ||
Depreciation of property, plant and equipment | 5/13 | ||
Impairment of intangible assets | 5/12 | ||
Amortisation of intangible assets | 5/12 | ||
Shares purchased to satisfy employee share schemes | ( | ||
Share-based payments expense | 6/21 | ||
Cash generated from operations before changes in working capital and provisions | |||
Decrease in inventories | |||
Decrease/(increase) in receivables | ( | ||
(Decrease)/increase in payables | ( | ||
(Decrease)/increase in provisions | ( | ||
Movement in employee benefits | ( | ( | |
Cash generated from operations | |||
Interest received | |||
Interest paid | ( | ( | |
Taxation paid | ( | ( | |
Net cash generated from operating activities | |||
| Cash flows generated from/(used by) investing activities | |||
Additions to owned property, plant and equipment and leasehold improvements | 13 | ( | |
Additions to intangible assets | 12 | ( | ( |
Proceeds on disposals of property, plant and equipment | |||
Net cash used by investing activities | ( | ( | |
| Cash flows generated from/(used by) financing activities | |||
| Ordinary dividends paid | ( | ( | |
Share buyback | ( | ||
Acquisition of treasury shares | ( | ( | |
Repayments of lease liabilities – principal | ( | ( | |
Net cash used by financing activities | ( | ( | |
Net increase in cash and cash equivalents – with restrictions | |||
Net (decrease)/increase in cash and cash equivalents | ( | ||
Net increase in cash and cash equivalents (including cash with restrictions) | |||
Cash and cash equivalents at beginning of the year (including cash with restrictions) | 17 | ||
Cash and cash equivalents at end of the year (including cash with restrictions) | 17 |
* See note 26 for more information on restatements.
ConsolidatedCashFlowStatement
Year ended 31 December 2024
Costain Group PLC | Annual Report and Accounts 2024144
NotestotheFinancialStatements
1 General information
of its registered office and principal place of business is disclosed on page 189 of this annual report. The principal activities of the
Company and its subsidiary undertakings (collectively referred to as ‘the Group’) are described in the Strategic Report.
The consolidated financial statements of the Company for the year ended 31 December 2024 comprise the Group and the Group’s
interests in associates, joint ventures and joint operations. The Parent Company financial statements present information about the
Company as a separate entity and not about its Group.
The financial statements were authorised for issue by the directors on 10 March 2025.
2 Summary of material accounting policies
145
Strategic ReportOverview Governance Financial Statements
Costain Group PLC | Annual Report and Accounts 2024146
Notes to the Financial Statements continued
2 Summary of material accounting policies continued
147
Strategic ReportOverview Governance Financial Statements
Costain Group PLC | Annual Report and Accounts 2024148
Notes to the Financial Statements continued
2 Summary of material accounting policies continued
Customer relationships | – on a straight-line basis up to seven years |
Other intangibles (including other acquired) | – on a straight-line basis up to five years |
149
Strategic ReportOverview Governance Financial Statements
Leasehold buildings | – shorter of 50 years or lease term |
Vehicles, plant and equipment | – 3 to 10 years |
Leasehold improvements | – lease term |
Costain Group PLC | Annual Report and Accounts 2024150
Notes to the Financial Statements continued
2 Summary of material accounting policies continued
151
Strategic ReportOverview Governance Financial Statements
Costain Group PLC | Annual Report and Accounts 2024152
Notes to the Financial Statements continued
2 Summary of material accounting policies continued
153
Strategic ReportOverview Governance Financial Statements
Costain Group PLC | Annual Report and Accounts 2024154
Notes to the Financial Statements continued
3 Reconciliation of reported operating profit to adjusted operating profit
’Adjusted operating profit’ and ‘adjusted earnings per share’ are presented as non-GAAP alternative performance measures. The Board
considers the adjusted measures better reflect the underlying trading performance of the Group for the reasons described in note 2.
The profit adjustments represent amounts included in the income statement.
In 2024, Costain settled a fire safety compliance claim in relation to the design and build of a development which completed in 2001.
The settlement closes out all known and unknown future claims on the building. The settlement is offset by a related insurance credit. A
detailed review has identified one other obligation on a building completed in 2013; a provision has been created for this liability in year.
Both the net settlement and the provision have been treated as adjusting items totalling £6.7m, reflecting that the costs are not related
to Costain’s normal course of business.
£5.4m was incurred on the Group’s Transformation programme in 2024, the final year of the programme (2023: £6.2m) and £nil (2023:
£1.8m) of restructuring costs.
A £0.1m credit has been recognised as a result of the sale of assets in 2024, which were written down to £nil as part of the restructure
of the Group’s digital hardware activities in 2023.
In 2023, the Group restructured its digital hardware activities to focus on service capabilities. As a result, the capitalised development
costs of products being developed under the Group’s manufacturing capabilities were impaired by £5.3m to £nil as the Group had exited
this manufacturing.
| Other | |||
| Adjusted | items | Total | |
| 2024 | £m | £m | £m |
Revenue | 1,251.1 | – | 1,251.1 |
Cost of sales | (1,147.8) | – | (1,147.8) |
Gross profit | 103.3 | – | 103.3 |
Administrative expenses before adjusting items | (60.2) | – | (60.2) |
| Adjusting items: | |||
Restructuring credit | – | 0.1 | 0.1 |
Transformation costs | – | (5.4) | (5.4) |
Fire safety claims | – | (6.7) | (6.7) |
Administrative expenses | (60.2) | (12.0) | (72.2) |
Operating profit/(loss) | 43.1 | (12.0) | 31.1 |
Net finance income | 5.4 | – | 5.4 |
Profit/(loss) before tax | 48.5 | (12.0) | 36.5 |
Taxation | (8.9) | 3.0 | (5.9) |
Profit/(loss) for the year attributable to equity holders of the Parent | 39.6 | (9.0) | 30.6 |
Basic earnings per share | 14.6p | 11.3p |
155
Strategic ReportOverview Governance Financial Statements
| Intangible | Other | |||
| Adjusted | impairment | items | Total | |
| 2023 | £m | £m | £m | £m |
Revenue | 1,332.0 | – | – | 1,332.0 |
Cost of sales | (1,227.2) | – | – | (1,227.2) |
Gross profit | 104.8 | – | – | 104.8 |
Administrative expenses before adjusting items | (64.7) | – | – | (64.7) |
| Adjusting items: | ||||
Restructuring costs | – | – | (1.8) | (1.8) |
Transformation costs | – | – | (6.2) | (6.2) |
Impairment of intangible asset | – | (5.3) | – | (5.3) |
Administrative expenses | (64.7) | (5.3) | (8.0) | (78.0) |
Operating profit/(loss) | 40.1 | (5.3) | (8.0) | 26.8 |
Net finance income | 4.1 | – | – | 4.1 |
Profit/(loss) before tax | 44.2 | (5.3) | (8.0) | 30.9 |
Taxation | (10.7) | – | 1.9 | (8.8) |
Profit/(loss) for the year attributable to equity holders of the Parent | 33.5 | (5.3) | (6.1) | 22.1 |
Basic earnings per share | 12.2p | 8.1p |
4 Operating segments
The Group has two business segments: Natural Resources and Transportation. These segments are strategic business units with
separate management and have different customers or offer different services. Segmental information is provided to the chief executive
who is the chief operating decision maker. The segments are discussed in the Strategic Report section of this annual report.
Intersegment sales and transfers are not material.
Costain Group PLC | Annual Report and Accounts 2024156
Notes to the Financial Statements continued
4 Operating segments continued
| Natural | Central | |||
| Resources | Transportation | costs | Total | |
| 2024 | £m | £m | £m | £m |
| Segment revenue | ||||
Total revenue | 405.3 | 845.8 | – | 1,251.1 |
| Segment profit/(loss) | ||||
Operating profit/(loss) before adjusting items | 23.8 | 29.9 | (10.6) | 43.1 |
| Adjusting items: | ||||
Restructuring credit | – | – | 0.1 | 0.1 |
Transformation costs | – | – | (5.4) | (5.4) |
Fire safety claims | – | – | (6.7) | (6.7) |
Profit/(loss) from operations | 23.8 | 29.9 | (22.6) | 31.1 |
Net finance income | 5.4 | |||
Profit before tax | 36.5 | |||
| Segment profit/(loss) is stated after charging the following: | ||||
Depreciation | 4.5 | 7.4 | – | 11.9 |
Amortisation | 0.1 | 0.2 | – | 0.3 |
| Segment assets | ||||
Reportable segment assets | 144.0 | 179.1 | 0.6 | 323.7 |
| Unallocated assets: | ||||
Retirement benefit asset | 54.9 | |||
Deferred tax | 8.6 | |||
Income tax | 1.5 | |||
Cash and cash equivalents | 158.5 | |||
Total assets | 547.2 | |||
| Additions to non-current assets | ||||
Property, plant and equipment | 12.2 | 14.6 | – | 26.8 |
Intangible assets | 2.7 | 3.1 | – | 5.8 |
| Segment liabilities | ||||
Reportable segment liabilities | 125.7 | 175.5 | 10.3 | 311.5 |
Total liabilities | 311.5 |
Recorded within ‘Reportable segment assets’ is ‘cash and cash equivalents – with restrictions’ which represent amounts held in trust
bank accounts on behalf of certain customers and designated for future payment to suppliers.
157
Strategic ReportOverview Governance Financial Statements
| Natural | Central | |||
| Resources | Transportation | costs | Total | |
| 2023 | £m | £m | £m | £m |
| Segment revenue | ||||
Total revenue | 388.9 | 943.1 | – | 1,332.0 |
| Segment profit/(loss) | ||||
Operating profit/(loss) before adjusting items | 21.8 | 28.0 | (9.7) | 40.1 |
| Adjusting items: | ||||
Restructuring costs | – | (1.8) | – | (1.8) |
Transformation costs | (0.1) | – | (6.1) | (6.2) |
Impairment of intangible asset | – | (5.3) | – | (5.3) |
Profit/(loss) from operations | 21.7 | 20.9 | (15.8) | 26.8 |
Net finance income | 4.1 | |||
Profit before tax | 30.9 | |||
| Segment profit/(loss) is stated after charging the following: | ||||
Depreciation | 4.5 | 10.3 | – | 14.8 |
Amortisation and impairment | 0.2 | 6.4 | – | 6.6 |
| Segment assets | ||||
Reportable segment assets (as restated)* | 128.1 | 183.5 | 0.9 | 312.5 |
| Unallocated assets: | ||||
Retirement benefit asset | 53.5 | |||
Deferred tax | 11.8 | |||
Cash and cash equivalents | 164.4 | |||
Total assets (as restated)* | 542.2 | |||
| Additions to non-current assets | ||||
Property, plant and equipment | 4.1 | 6.1 | – | 10.2 |
Intangible assets | – | 0.1 | – | 0.1 |
| Segment liabilities | ||||
Reportable segment liabilities (as restated)* | 98.4 | 215.2 | 8.6 | 322.2 |
| Unallocated liabilities: | ||||
Income tax | 0.6 | |||
Total liabilities (as restated)* | 322.8 |
* See note 26 for more information on restatements.
Recorded within ‘Reportable segment assets’ is ‘cash and cash equivalents – with restrictions’ which represent amounts held in trust
bank accounts on behalf of certain customers and designated for future payment to suppliers.
Costain Group PLC | Annual Report and Accounts 2024158
Notes to the Financial Statements continued
| 2024 | 2023 | |
| £m | £m | |
| Profit before tax is stated after charging: | ||
| Amortisation and impairment of intangible assets (note 12) | 0.3 | 6.6 |
Depreciation of property, plant and equipment (note 13) | 11.9 | 14.8 |
Restructuring costs (note 3) | – | 1.8 |
Transformation costs (note 3) | 5.4 | 6.2 |
Fire safety claims (note 3) | 6.7 | – |
Expenses relating to short-term leases and leases of low-value assets | 42.6 | 54.8 |
| and after crediting: | ||
| Restructuring credit (note 3) | 0.1 | – |
RDEC grant income | 6.3 | 5.7 |
| 2024 | 2023 | |
| £m | £m | |
Fees payable to the Group’s auditors for the audit of the annual financial statements | 0.2 | 0.1 |
| Fees payable to the Group’s auditors in respect of: | ||
| Audit of financial statements of subsidiaries of the Company | 1.0 | 1.0 |
1.2 | 1.1 |
159
Strategic ReportOverview Governance Financial Statements
| 2024 | 2023 | |
| £m | £m | |
Wages and salaries | 233.3 | 235.9 |
Social security costs | 25.6 | 25.7 |
Other pension costs – defined contribution schemes (note 21) | 12.9 | 12.6 |
Share-based payments expense (note 21) | 2.3 | 2.2 |
274.1 | 276.4 |
| 2024 | 2023 | |
| Number | Number | |
| Monthly average number of persons employed | ||
| Natural Resources | 1,608 | 1,620 |
Transportation | 1,551 | 1,753 |
Central | 23 | 21 |
3,182 | 3,394 |
7 Remuneration of directors
Details of the directors’ remuneration, pension entitlements, interest in the Long-Term Incentive Plans, Annual Incentive Plans and share
options are included in the Directors’ Remuneration report.
For the purpose of the disclosure required by Schedule 5 to the Companies Act 2006, the total aggregate emoluments of the directors
in respect of 2024 and 2023 are detailed below:
| 2024 | 2023 | |
| £m | £m | |
Remuneration | 2.2 | 2.0 |
Post-employment benefits | 0.1 | 0.1 |
2.3 | 2.1 |
8 Finance income/(expense)
| 2024 | 2023 | |
| £m | £m | |
Interest income from bank deposits | 6.7 | 4.8 |
Interest income on the net assets of the defined benefit pension scheme (note 21) | 2.6 | 3.2 |
Finance income | 9.3 | 8.0 |
Interest payable on interest bearing bank loans, borrowings and other similar charges | (1.4) | (2.3) |
Interest expense on lease liabilities | (2.5) | (1.5) |
Other interest | – | (0.1) |
Finance expense | (3.9) | (3.9) |
Net finance income | 5.4 | 4.1 |
Other similar charges includes arrangement and commitment fees payable.
Costain Group PLC | Annual Report and Accounts 2024160
Notes to the Financial Statements continued
| 2024 | 2023 | |
| £m | £m | |
| On profit for the year | ||
| UK corporation tax at statutory rate of 25.0% (2023: blended rate of 23.5%) | (4.1) | (5.4) |
Adjustment in respect of prior years | 1.0 | 1.0 |
Current tax charge for the year | (3.1) | (4.4) |
Deferred tax charge for the current year | (4.0) | (3.2) |
Adjustment in respect of prior years | 1.2 | (1.2) |
Deferred tax charge for the year | (2.8) | (4.4) |
Tax charge in the consolidated income statement | (5.9) | (8.8) |
| 2024 | 2023 | |
| £m | £m | |
| Tax reconciliation | ||
| Profit before tax | 36.5 | 30.9 |
Taxation at 25.0% (2023: 23.5%) | (9.1) | (7.2) |
Amounts qualifying for tax relief and disallowed expenses | 1.0 | (1.4) |
Adjustments in respect of prior years | 2.2 | (0.2) |
Tax charge in the consolidated income statement | (5.9) | (8.8) |
Effective rate of tax | 16.2% | 28.5% |
| 2024 | 2023 | |
| £m | £m | |
| Tax in other comprehensive income | ||
| Current tax – Retirement benefit assets | 1.2 | 2.6 |
Deferred tax – Retirement benefit assets | (0.4) | 1.7 |
Tax credit in other comprehensive income | 0.8 | 4.3 |
| 2024 | 2023 | |
| £m | £m | |
| Deferred tax asset recognised | ||
| Accelerated capital allowances | 1.0 | 2.2 |
Short-term temporary differences | 3.6 | 1.6 |
Retirement benefit assets | (13.7) | (13.3) |
Tax losses | 17.7 | 21.3 |
Deferred tax asset | 8.6 | 11.8 |
161
Strategic ReportOverview Governance Financial Statements
| 2024 | 2023 | |
| £m | £m | |
| Analysis of deferred tax movements | ||
| At 1 January | 11.8 | 14.5 |
| Deferred tax in consolidated income statement | ||
| Accelerated capital allowances | (1.2) | 0.1 |
Short-term temporary differences | 2.0 | (1.6) |
Tax losses | (3.6) | (2.9) |
(2.8) | (4.4) | |
| Deferred tax in other comprehensive income | ||
| Retirement benefit assets | (0.4) | 1.7 |
At 31 December | 8.6 | 11.8 |
Group | Company | |||
| 2024 | 2023 | 2024 | 2023 | |
| £m | £m | £m | £m | |
Management expenses and charges incurred by Parent Company | 54.4 | 54.4 | 54.2 | 54.2 |
Capital losses | 270.6 | 270.6 | 241.0 | 241.0 |
Costain Group PLC | Annual Report and Accounts 2024162
Notes to the Financial Statements continued
10 Earnings per share
The calculation of earnings per share is based on profit of £30.6m (2023: £22.1m) and the number of shares set out below.
| 2024 | 2023 | |
| Number | Number | |
| (millions) | (millions) | |
Weighted average number of ordinary shares in issue for basic earnings per share calculation | 271.3 | 273.6 |
Dilutive potential ordinary shares arising from employee share schemes | 3.3 | 8.5 |
Weighted average number of ordinary shares in issue for diluted earnings per share calculation | 274.6 | 282.1 |
At 31 December 2024, nil options were excluded from the weighted average number of ordinary shares calculation because they were
anti-dilutive (2023: nil options were excluded).
| Dividend per | 2024 | 2023 | |
| share pence | £m | £m | |
Interim dividend for the year ended 31 December 2023 | 0.4 | – | 1.1 |
Final dividend for the year ended 31 December 2023 | 0.8 | 2.2 | – |
Interim dividend for the year ended 31 December 2024 | 0.4 | 1.1 | – |
Amount recognised as distributions to equity holders in the year | 3.3 | 1.1 | |
Dividends settled in shares | (0.1) | – | |
Dividends settled in cash | 3.2 | 1.1 |
163
Strategic ReportOverview Governance Financial Statements
| Customer | Other acquired | Other | |||
| Goodwill | relationships | intangibles | intangibles | Total | |
| Group | £m | £m | £m | £m | £m |
| Cost | |||||
At 1 January 2023 | 54.1 | 15.4 | 9.7 | 16.2 | 95.4 |
Additions | – | – | – | 0.1 | 0.1 |
Disposals | – | – | – | (0.1) | (0.1) |
At 31 December 2023 | 54.1 | 15.4 | 9.7 | 16.2 | 95.4 |
At 1 January 2024 | 54.1 | 15.4 | 9.7 | 16.2 | 95.4 |
Additions | – | – | – | 5.8 | 5.8 |
Disposals | – | – | – | (7.6) | (7.6) |
At 31 December 2024 | 54.1 | 15.4 | 9.7 | 14.4 | 93.6 |
| Accumulated amortisation and impairment | |||||
At 1 January 2023 | 9.0 | 15.4 | 9.7 | 9.1 | 43.2 |
Charge in year | – | – | – | 1.3 | 1.3 |
Impairment in year | – | – | – | 5.3 | 5.3 |
Disposals | – | – | – | (0.1) | (0.1) |
At 31 December 2023 | 9.0 | 15.4 | 9.7 | 15.6 | 49.7 |
At 1 January 2024 | 9.0 | 15.4 | 9.7 | 15.6 | 49.7 |
Charge in year | – | – | – | 0.3 | 0.3 |
Disposals | – | – | – | (7.6) | (7.6) |
At 31 December 2024 | 9.0 | 15.4 | 9.7 | 8.3 | 42.4 |
| Net book value | |||||
At 31 December 2024 | 45.1 | – | – | 6.1 | 51.2 |
At 31 December 2023 | 45.1 | – | – | 0.6 | 45.7 |
At 1 January 2023 | 45.1 | – | – | 7.1 | 52.2 |
Costain Group PLC | Annual Report and Accounts 2024164
Notes to the Financial Statements continued
| Right-of-use assets | |||||
| Leasehold | Plant and | Land and | Vehicles, plant | ||
| improvements | equipment | buildings | and equipment | Total | |
| Group | £m | £m | £m | £m | £m |
| Cost | |||||
At 1 January 2023 | – | 24.6 | 21.8 | 28.3 | 74.7 |
Additions | – | – | 0.5 | 9.7 | 10.2 |
Disposals | – | (9.6) | (2.8) | (5.3) | (17.7) |
At 31 December 2023 | – | 15.0 | 19.5 | 32.7 | 67.2 |
At 1 January 2024 | – | 15.0 | 19.5 | 32.7 | 67.2 |
Additions | 8.2 | 0.1 | 7.3 | 11.2 | 26.8 |
Disposals | – | (7.1) | (10.9) | (15.5) | (33.5) |
At 31 December 2024 | 8.2 | 8.0 | 15.9 | 28.4 | 60.5 |
| Accumulated depreciation and impairment | |||||
At 1 January 2023 | – | 23.3 | 7.6 | 11.8 | 42.7 |
Charge in year | – | 0.9 | 4.8 | 9.1 | 14.8 |
Disposals | – | (9.6) | (2.6) | (4.9) | (17.1) |
At 31 December 2023 | – | 14.6 | 9.8 | 16.0 | 40.4 |
At 1 January 2024 | – | 14.6 | 9.8 | 16.0 | 40.4 |
Charge in year | 0.2 | 0.2 | 2.8 | 8.7 | 11.9 |
Disposals | – | (7.1) | (8.3) | (11.7) | (27.1) |
At 31 December 2024 | 0.2 | 7.7 | 4.3 | 13.0 | 25.2 |
| Net book value | |||||
At 31 December 2024 | 8.0 | 0.3 | 11.6 | 15.4 | 35.3 |
At 31 December 2023 | – | 0.4 | 9.7 | 16.7 | 26.8 |
At 1 January 2023 | – | 1.3 | 14.2 | 16.5 | 32.0 |
| 2024 | 2023 | |
| £m | £m | |
Interest expense (included in finance expense) | 2.5 | 1.5 |
Expense relating to short-term leases (included in cost of sales and administrative expenses) | 42.6 | 54.8 |
| 2024 | 2023 | |
| £m | £m | |
Current | 13.0 | 10.3 |
Non-current | 12.8 | 14.0 |
25.8 | 24.3 |
165
Strategic ReportOverview Governance Financial Statements
14 Investments in subsidiaries, equity accounted joint ventures and associates
Group
Details of subsidiary undertakings, joint ventures, joint operations and associates are shown in note 24.
Certain subsidiaries of the Group (as indicated in note 24) have opted to take advantage of the audit exemption under Section 479A
of the Companies Act 2006 for the year ended 31 December 2024. In order to take advantage of this exemption, Costain Group PLC
undertakes to provide a Parent Company guarantee in respect of debts and liabilities of these subsidiaries at the balance sheet date
in accordance with Section 479C of the Companies Act 2006. The Company has assessed the probability of loss under these guarantees
as remote.
Investments in joint ventures | £m |
| Cost | |
| At 1 January 2023 | 20.9 |
At 31 December 2023 | 20.9 |
At 1 January 2024 | 20.9 |
At 31 December 2024 | 20.9 |
| Share of post-acquisition reserves | |
| At 1 January 2023 | (14.0) |
At 31 December 2023 | (14.0) |
At 1 January 2024 | (14.0) |
At 31 December 2024 | (14.0) |
| Accumulated impairment | |
At 1 January 2023 | (6.5) |
At 31 December 2023 | (6.5) |
At 1 January 2024 | (6.5) |
At 31 December 2024 | (6.5) |
| Net book value | |
| At 31 December 2024 | 0.4 |
At 31 December 2023 | 0.4 |
At 1 January 2023 | 0.4 |
Costain Group PLC | Annual Report and Accounts 2024166
Notes to the Financial Statements continued
14 Investments in subsidiaries, equity accounted joint ventures and associates continued
Group continued
| 2024 | 2023 | |
| Joint ventures | Joint ventures | |
| £m | £m | |
Revenue | 0.1 | – |
Profit before tax | – | – |
Taxation | – | – |
Profit for the year | – | – |
Non-current assets | – | – |
Trade and other receivables | 0.7 | 0.9 |
Cash and cash equivalents | 0.1 | – |
Trade and other payables – current | (0.4) | (0.5) |
Non-current liabilities | – | – |
Investments in joint ventures and associates | 0.4 | 0.4 |
Dividends received by Group | – | – |
| 2024 | 2023 | |
| Joint ventures | Joint ventures | |
| £m | £m | |
Revenue | 0.2 | 0.1 |
Profit before tax | – | – |
Taxation | – | – |
Profit for the year | – | – |
Non-current assets | – | – |
Trade and other receivables | 1.5 | 2.0 |
Cash and cash equivalents | 0.2 | 0.1 |
Trade and other payables – current | (0.7) | (0.9) |
Non-current liabilities | – | – |
Equity | 1.0 | 1.2 |
167
Strategic ReportOverview Governance Financial Statements
Company
Investments in subsidiaries | £m |
| Cost | |
| At 1 January 2023 | 427.1 |
Additions | 2.2 |
At 31 December 2023 | 429.3 |
At 1 January 2024 | 429.3 |
Additions | 2.3 |
At 31 December 2024 | 431.6 |
Amounts written off At 1 January 2023 | (273.7) |
At 31 December 2023 | (273.7) |
At 1 January 2024 | (273.7) |
At 31 December 2024 | (273.7) |
| Net book value | |
| At 31 December 2024 | 157.9 |
At 31 December 2023 | 155.6 |
At 1 January 2023 | 153.4 |
Additions relate to the increase in the cost of investments in subsidiaries by the equivalent amount of the equity-settled share-based
payment charge in relation to employees of subsidiaries included in the income statement (£2.3m (2023: £2.2m)).
Details of the Company’s subsidiaries are set out in note 24.
| 2023 | ||
| 2024 | (as restated)* | |
| £m | £m | |
Contract assets | 84.0 | 84.8 |
Contract liabilities | (56.2) | (63.0) |
Costain Group PLC | Annual Report and Accounts 2024168
Notes to the Financial Statements continued
15 Assets and liabilities related to contracts with customers continued
| 2024 | 2023 | |
| £m | £m | |
| Aggregate amount of the transaction price allocated to long-term | ||
| contracts that are partially or fully unsatisfied as at 31 December | 2,099.7 | 1,826.2 |
Group | Company | |||
| 2023 | ||||
| 2024 | (as restated)* | 2024 | 2023 | |
| £m | £m | £m | £m | |
| Amounts included in current assets | ||||
| Trade receivables | 54.6 | 68.1 | – | – |
Other receivables | 20.6 | 22.3 | – | – |
Contract assets | 84.0 | 84.8 | – | – |
Prepayments | 26.1 | 23.1 | 0.6 | 0.9 |
185.3 | 198.3 | 0.6 | 0.9 | |
| Amounts included in non-current assets | ||||
| Other receivables | 4.3 | 4.2 | – | – |
Group | Company | |||
| 2024 | 2023 | 2024 | 2023 | |
| £m | £m | £m | £m | |
Cash and cash equivalents | 158.5 | 164.4 | 77.5 | 81.8 |
Cash and cash equivalents in the cash flow statement | 158.5 | 164.4 | 77.5 | 81.8 |
Group | Company | |||
| 2023 | ||||
| 2024 | (as restated)* | 2024 | 2023 | |
| £m | £m | £m | £m | |
Cash and cash equivalents – with restrictions | 38.4 | 24.4 | – | – |
Cash and cash equivalents – with restrictions in the cash flow statement | 38.4 | 24.4 | – | – |
169
Strategic ReportOverview Governance Financial Statements
Group | Company | |||
| 2023 | ||||
| 2024 | (as restated)* | 2024 | 2023 | |
| £m | £m | £m | £m | |
Cash and cash equivalents (including cash with restrictions) | 196.9 | 188.8 | 77.5 | 81.8 |
Less Cash and cash equivalents – with restrictions | (38.4) | (24.4) | – | – |
Net cash before lease liabilities | 158.5 | 164.4 | 77.5 | 81.8 |
Lease liabilities (note 13) | (25.8) | (24.3) | – | – |
Net cash | 132.7 | 140.1 | 77.5 | 81.8 |
| Cash and cash | ||||
| equivalents | Less Cash and cash | |||
| (including cash with | equivalents – with | |||
| restrictions) | restrictions | |||
| (as restated)* | (as restated)* | Lease liabilities | Total | |
| Group | £m | £m | £m | £m |
Net cash/(debt) at 1 January 2023 | 134.1 | (10.3) | (29.5) | 94.3 |
Cash flows | 54.7 | (14.1) | 12.6 | 53.2 |
New leases | – | – | (10.2) | (10.2) |
Disposal of leases | – | – | 2.8 | 2.8 |
Interest expense | – | – | (1.5) | (1.5) |
Interest payments (presented as operating cash flows) | – | – | 1.5 | 1.5 |
Net cash/(debt) at 31 December 2023 | 188.8 | (24.4) | (24.3) | 140.1 |
Net cash/(debt) at 1 January 2024 | 188.8 | (24.4) | (24.3) | 140.1 |
Cash flows | 8.1 | (14.0) | 11.3 | 5.4 |
New leases | – | – | (18.5) | (18.5) |
Disposal of leases | – | – | 5.7 | 5.7 |
Interest expense | – | – | (2.5) | (2.5) |
Interest payments (presented as operating cash flows) | – | – | 2.5 | 2.5 |
Net cash/(debt) at 31 December 2024 | 196.9 | (38.4) | (25.8) | 132.7 |
| Cash and cash | |
| equivalents | |
| Company | £m |
Net cash/(debt) at 1 January 2023 | 0.1 |
Cash flows | 81.7 |
Net cash at 31 December 2023 | 81.8 |
Net cash/(debt) at 1 January 2024 | 81.8 |
Cash flows | (4.3) |
Net cash at 31 December 2024 | 77.5 |
Costain Group PLC | Annual Report and Accounts 2024170
Notes to the Financial Statements continued
| Group and Company | ||
| 2024 | 2023 | |
| £m | £m | |
Expiring between one and five years | 270.0 | 270.0 |
Element of above facilities available for borrowings | – | – |
171
Strategic ReportOverview Governance Financial Statements
| Less than | 60 to 120 days | More than 120 days | |||
| Current | 60 days past due | past due | past due | Total | |
| 31 December 2024 | |||||
| Group 1 | |||||
| Expected loss rate | 0.00% | 0.10% | 0.25% | 0.50% | |
£m | £m | £m | £m | £m | |
Trade receivables | 40.5 | 13.4 | 0.1 | 0.3 | 54.3 |
Contract assets | 60.8 | 13.6 | 2.5 | 7.1 | 84.0 |
Loss allowance | – | – | – | – | – |
| Group 2 | |||||
| Expected loss rate | 1.0% | 2.0% | 15.0% | 30.0% | |
£m | £m | £m | £m | £m | |
Trade receivables | 0.1 | 0.2 | – | – | 0.3 |
Contract assets | – | – | – | – | – |
Loss allowance | – | – | – | – | – |
| 31 December 2023 | |||||
| Group 1 | |||||
| Expected loss rate | 0.00% | 0.10% | 0.25% | 0.50% | |
£m | £m | £m | £m | £m | |
Trade receivables (as restated)* | 54.1 | 11.9 | 1.7 | 0.2 | 67.9 |
Contract assets (as restated)* | 71.7 | 6.4 | 2.0 | 4.7 | 84.8 |
Loss allowance | – | – | – | – | – |
| Group 2 | |||||
| Expected loss rate | 1.0% | 2.0% | 15.0% | 30.0% | |
£m | £m | £m | £m | £m | |
Trade receivables | 0.1 | – | – | 0.1 | 0.2 |
Contract assets | – | – | – | – | – |
Loss allowance | – | – | – | – | – |
Costain Group PLC | Annual Report and Accounts 2024172
Notes to the Financial Statements continued
18 Financial instruments – Fair values and risk management continued
Riskmanagement continued
2024 | 2023 | |||||||
| Between | Between | |||||||
| Within | one and | After five | Within | one and | After five | |||
| Total | one year | five years | years | Total | one year | five years | years | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
| Cash and cash equivalents: | ||||||||
pounds sterling | 158.2 | 158.2 | – | – | 163.9 | 163.9 | – | – |
other | 0.3 | 0.3 | – | – | 0.5 | 0.5 | – | – |
158.5 | 158.5 | – | – | 164.4 | 164.4 | – | – | |
Cash and cash equivalents – with restrictions: | ||||||||
pounds sterling (as restated)* | 38.4 | 38.4 | – | – | 24.4 | 24.4 | – | – |
38.4 | 38.4 | – | – | 24.4 | 24.4 | – | – | |
| Trade and other receivables: | ||||||||
pounds sterling (as restated)* | 79.5 | 75.2 | 4.3 | – | 94.6 | 90.4 | 4.2 | – |
| Insurance recovery asset: | ||||||||
pounds sterling | 8.8 | 8.8 | – | – | 12.7 | 11.0 | 1.7 | – |
88.3 | 84.0 | 4.3 | – | 107.3 | 101.4 | 5.9 | – | |
| Total financial assets not measured | ||||||||
at fair value (as restated)* | 285.2 | 280.9 | 4.3 | – | 296.1 | 290.2 | 5.9 | – |
173
Strategic ReportOverview Governance Financial Statements
2024 | 2023 | |||||
| Between | Between | |||||
| Within | one and | Within | one and | |||
| Total | one year | five years | Total | one year | five years | |
| £m | £m | £m | £m | £m | £m | |
Lease liabilities – pounds sterling | 25.8 | 13.0 | 12.8 | 24.3 | 10.3 | 14.0 |
Trade payables and amounts owed to joint ventures and associates – pounds sterling (as re-presented)** | 47.3 | 45.5 | 1.8 | 72.1 | 69.9 | 2.2 |
| Total financial liabilities not measured at fair value | ||||||
(as re-presented)** | 73.1 | 58.5 | 14.6 | 96.4 | 80.2 | 16.2 |
2024 | 2023 | |||
| Current | Non-current | Current | Non-current | |
| £m | £m | £m | £m | |
Trade and other receivables (as above) (as restated)* | 84.0 | 4.3 | 101.4 | 5.9 |
Contract assets (as restated)* | 84.0 | – | 84.8 | – |
Prepayments | 26.1 | – | 23.1 | – |
194.1 | 4.3 | 209.3 | 5.9 |
2024 | 2023 | |||
| Current | Non-current | Current | Non-current | |
| £m | £m | £m | £m | |
Trade and other payables (as above) (as re-presented)** | 45.5 | 1.8 | 69.9 | 2.2 |
Social security | 8.8 | – | 8.6 | – |
Other payables | 21.0 | – | 24.1 | – |
Contract liabilities (as restated)* | 56.2 | – | 63.0 | – |
Accruals and deferred income (as restated)* | 139.5 | – | 115.8 | – |
271.0 | 1.8 | 281.4 | 2.2 |
Costain Group PLC | Annual Report and Accounts 2024174
Notes to the Financial Statements continued
18 Financial instruments – Fair values and risk management continued
Financialassetsandliabilities continued
2024 | 2023 | |
Cash and cash equivalents | 0.00% to 5.05% | 0.00% to 5.15% |
Type | Valuation technique | Significant unobservable inputs |
Other financial liabilities (as above) | Discounted cash flow | Not applicable |
Group | Company | |||
| 2023 | ||||
| 2024 | (as restated)* | 2024 | 2023 | |
| £m | £m | £m | £m | |
| Current liabilities | ||||
| Trade payables | 45.3 | 69.3 | – | – |
Other payables | 21.0 | 24.1 | 0.1 | 0.1 |
Social security | 8.8 | 8.6 | – | – |
Contract liabilities | 56.2 | 63.0 | – | – |
Accruals and deferred income | 139.5 | 115.8 | 0.5 | 0.5 |
Amounts owed to joint ventures and associates | 0.2 | 0.6 | – | – |
Amounts owed to subsidiary undertakings | – | – | 46.0 | 40.2 |
271.0 | 281.4 | 46.6 | 40.8 | |
| Non-current liabilities | ||||
| Other payables | 1.8 | 2.2 | – | – |
1.8 | 2.2 | – | – |
175
Strategic ReportOverview Governance Financial Statements
| Rectification | |||
| provision | Other | Total | |
| Group | £m | £m | £m |
| Current | |||
| At 1 January 2023 | 8.5 | 0.9 | 9.4 |
Provided | 2.2 | 2.3 | 4.5 |
Utilised | (2.8) | (0.1) | (2.9) |
Released | – | (0.4) | (0.4) |
Reclassified from non-current | 3.7 | – | 3.7 |
At 31 December 2023 | 11.6 | 2.7 | 14.3 |
At 1 January 2024 | 11.6 | 2.7 | 14.3 |
Provided | 2.6 | 6.6 | 9.2 |
Utilised | (8.4) | (0.1) | (8.5) |
Released | – | (2.1) | (2.1) |
At 31 December 2024 | 5.8 | 7.1 | 12.9 |
| Non-current | |||
At 1 January 2023 | 3.7 | – | 3.7 |
Reclassified to current | (3.7) | – | (3.7) |
At 31 December 2023 | – | – | – |
At 1 January 2024 | – | – | – |
At 31 December 2024 | – | – | – |
| Funding | |
| obligations | |
| Company | £m |
| Current | |
| At 1 January 2023 | 0.1 |
Reclassified from non-current | 0.1 |
Utilised | (0.1) |
At 31 December 2023 | 0.1 |
At 1 January 2024 | 0.1 |
Reclassified from non-current | 0.1 |
Utilised | (0.1) |
At 31 December 2024 | 0.1 |
| Non-current | |
| At 1 January 2023 | 0.7 |
Reclassified to current | (0.1) |
At 31 December 2023 | 0.6 |
At 1 January 2024 | 0.6 |
Reclassified to current | (0.1) |
At 31 December 2024 | 0.5 |
Costain Group PLC | Annual Report and Accounts 2024176
Notes to the Financial Statements continued
20 Provisions for other liabilities and charges continued
Company
Provisions in the Company relate to funding obligations to a non-trading overseas subsidiary, which eliminate on consolidation.
21 Employee benefits
Pensions
The Group operates a defined benefit pension scheme in the UK; contributions are paid by subsidiary undertakings. There are also
two defined contribution pension schemes in place in the UK, to which contributions are made by both subsidiary undertakings and
employees. The total pension charge in the income statement is £12.2m, comprising £14.8m included in operating costs less £2.6m
interest income included in net finance income (2023: £11.4m, comprising £14.6m included in operating costs less £3.2m interest income
included in net finance income).
| 2024 | 2023 | 2022 | |
| £m | £m | £m | |
Present value of defined benefit obligations | (497.5) | (542.6) | (527.1) |
Fair value of scheme assets | 552.4 | 596.1 | 587.3 |
Recognised asset for defined benefit obligations | 54.9 | 53.5 | 60.2 |
177
Strategic ReportOverview Governance Financial Statements
| 2024 | 2023 | |
| Movements in present value of defined benefit obligations | £m | £m |
At 1 January | 542.6 | 527.1 |
Interest cost | 25.0 | 25.5 |
Remeasurements – demographic assumptions | 0.5 | (1.0) |
Remeasurements – financial assumptions | (41.0) | 14.8 |
Remeasurements – experience adjustments | 3.7 | 10.5 |
Benefits paid | (33.3) | (34.3) |
At 31 December | 497.5 | 542.6 |
| 2024 | 2023 | |
| Movements in fair value of scheme assets | £m | £m |
At 1 January | 596.1 | 587.3 |
Interest income | 27.6 | 28.7 |
Remeasurements – return on assets | (39.9) | 6.5 |
Contributions by employer | 2.0 | 8.1 |
Administrative expenses | (0.1) | (0.2) |
Benefits paid | (33.3) | (34.3) |
At 31 December | 552.4 | 596.1 |
| 2024 | 2023 | |
| Expense recognised in the income statement | £m | £m |
Administrative expenses paid by the pension scheme | (0.1) | (0.2) |
Administrative expenses paid directly by the Group | (1.8) | (1.8) |
Interest income on the net assets of the defined benefit pension scheme | 2.6 | 3.2 |
0.7 | 1.2 |
| 2024 | 2023 | |
| Fair value of scheme assets | £m | £m |
Global equities | 90.0 | 99.5 |
Multi-asset growth funds | 20.7 | 65.9 |
Multi-credit fund | 83.8 | 96.6 |
LDI plus collateral | 339.7 | 323.8 |
Cash | 18.2 | 10.3 |
552.4 | 596.1 |
Costain Group PLC | Annual Report and Accounts 2024178
Notes to the Financial Statements continued
21 Employee benefits continued
Pensions continued
Defined benefit scheme continued
| 2024 | 2023 | 2022 | |
| Principal actuarial assumptions (expressed as weighted averages) | % | % | % |
Discount rate | 5.50 | 4.75 | 5.00 |
Future pension increases | 2.95 | 2.90 | 2.90 |
Inflation assumption | 3.10 | 3.05 | 3.10 |
2024 | 2023 | |||
| Male | Female | Male | Female | |
| (years) | (years) | (years) | (years) | |
Currently aged 65 | 21.9 | 23.8 | 22.0 | 23.8 |
Non-retirees currently aged 45 | 22.9 | 25.1 | 22.9 | 25.1 |
| Pension liability | Pension cost | |
| £m | £m | |
| Increasing the discount rate by 0.25%, decreases pension liability | ||
and increases pension income/reduces pension cost by Decreasing inflation by 0.25% (which reduces pension increases), decreases | 13.4 | 0.7 |
pension liability and increases pension income/reduces pension cost by Increasing life expectancy by one year, increases pension liability | 12.0 | 0.7 |
| and reduces pension income/increases pension cost by | 16.9 | 0.9 |
179
Strategic ReportOverview Governance Financial Statements
Costain Group PLC | Annual Report and Accounts 2024180
Notes to the Financial Statements continued
21 Employee benefits continued
Share-basedpayments continued
LTIP | AIP | SAYE | ||
| Weighted average | ||||
| Number | Number | Number | exercise price | |
| (m) | (m) | (m) | (p) | |
Outstanding at 1 January 2023 | 12.5 | 2.3 | 0.8 | 118.4 |
Forfeited during the year | (2.0) | (0.4) | (0.8) | 113.8 |
Exercised during the year | (0.6) | – | – | – |
Granted during the year | 3.7 | 1.5 | 4.9 | 50.0 |
Outstanding at 31 December 2023 | 13.6 | 3.4 | 4.9 | 50.0 |
Outstanding at 1 January 2024 | 13.6 | 3.4 | 4.9 | 50.0 |
Forfeited during the year | (1.4) | (0.1) | (0.4) | 51.1 |
Exercised during the year | (0.7) | (1.9) | – | 50.0 |
Granted during the year | 3.0 | 1.5 | 4.0 | 81.2 |
Outstanding at 31 December 2024 | 14.5 | 2.9 | 8.5 | 64.8 |
Exercisable at the end of the period | 2.0 | – | – | – |
2024 | 2023 | |
Expected volatility | 43.9% | 46.0% |
Expected life (years) | 3.5 | 3.5 |
Risk-free interest rate | 3.9% | 3.2% |
Expected dividend yield | 1.2% | 2.3% |
181
Strategic ReportOverview Governance Financial Statements
2024 | 2023 | |||
| Number | Nominal value | Number | Nominal value | |
| (millions) | £m | (millions) | £m | |
| Issued share capital | ||||
| Shares in issue at beginning of year – | ||||
| ordinary shares of 50p each, fully paid | 276.7 | 138.3 | 275.1 | 137.5 |
Issued in year (see below) | 1.8 | 0.9 | 1.6 | 0.8 |
Nominal value reduction | – | (136.4) | – | – |
Share buyback | (9.7) | (0.1) | – | – |
| Shares in issue at end of year – | ||||
| ordinary shares of one pence each (2023: 50p each), fully paid | 268.8 | 2.7 | 276.7 | 138.3 |
Costain Group PLC | Annual Report and Accounts 2024182
Notes to the Financial Statements continued
23 Contingent liabilities continued
| Registered | |||
| Percentage of | office/principal | ||
| Activity | equity held | place of business | |
| Principal subsidiary undertakings | |||
Costain Limited | Engineering, Construction and Maintenance | 100 | (1) |
Costain Engineering & Construction Limited | Holding and Service Company | 100 | (1) |
Costain Integrated Services Limited | Professional Services | 100 | (1) |
Costain Integrated Technology Solutions Limited | Technology Integration | 100 | (1) |
Costain Oil, Gas & Process Limited | Process Engineering | 100 | (1) |
Richard Costain Limited | Service Company | 100 | (1) |
| Issued share | Registered | ||||
| capital | Percentage of | office/principal | |||
| Activity | £m | equity held | place of business | Reporting date | |
| Principal joint ventures | |||||
ABC Electrification Ltd | Rail Electrification | 19.6 | 33.3 | (6) | 31 March |
4Delivery Limited | Civil Engineering | – | 40 | (3) | 31 March |
| Percentage | Country of | ||
| Activity | interest | business | |
| Major joint operations | |||
A-one+ Joint Venture – ASC area 12 – Highways England | Engineering and Maintenance | 33.3 | UK |
CH2M-Costain Joint Venture – Area 14 M&R contract | Engineering and Maintenance | 50 | UK |
Costain-Atkins-Black & Veatch Joint Venture – Thames Water AMP6 | Engineering | 70 | UK |
Costain-Galliford Try Joint Venture – M1 smart motorways | Civil Engineering | 50 | UK |
Costain-MWH Joint Venture – Southern Water | Civil Engineering | 50 | UK |
CVB Joint Venture – Thames Tideway Tunnel East | Civil Engineering | 40 | UK |
Galliford-Costain-Atkins Joint Venture – United Utilities | Engineering | 42.5 | UK |
Skanska-Costain-Strabag S1 Joint Venture – HS2 Main Works | Rail Engineering | 34 | UK |
Skanska-Costain-Strabag S2 Joint Venture – HS2 Main Works | Rail Engineering | 34 | UK |
The ASP Batch Joint Venture – Severn Trent – Large capital schemes outside AMP6 | Engineering | 33.3 | UK |
183
Strategic ReportOverview Governance Financial Statements
| Registered | |||
| Percentage of | office/principal | ||
| Status | equity held | place of business | |
| Other subsidiaries owned directly by Costain Group PLC | |||
Costain Civil Engineering Limited | Holding Company | 100 | (1) |
Costain Investments Limited | Dormant | 100 | (7) |
Costain USA Inc. | Holding Company | 100 | (5) |
County & District Properties Limited* | Trading | 100 | (1) |
Renown Investments (Holdings) Limited* | Trading | 100 | (1) |
Lysander Services Limited* | Trading | 100 | (1) |
| Other subsidiaries owned indirectly by Costain Group PLC | |||
Brunswick Infrastructure Services Limited | Dormant | 100 | (1) |
Calvert & Russell Limited* | Trading | 100 | (1) |
CLM Engineering (Overseas) Limited | Dormant | 100 | (1) |
COGAP (Middle East) Limited* | Holding Company | 100 | (1) |
Construction Study Centre Limited* | Trading | 100 | (1) |
Costain Alcaidesa Limited* | Dormant | 100 | (1) |
Costain America Inc. | Holding Company | 100 | (5) |
Costain Building & Civil Engineering Limited* | Holding Company | 100 | (1) |
Costain Construction Limited | Dormant | 100 | (1) |
Costain de Venezuela CA | Dormant | 100 | (14) |
Costain Energy Solutions Limited | Dormant | 100 | (1) |
Costain Engineering & Construction (Overseas) Limited* | Holding Company | 100 | (1) |
Costain Engineering Services Inc. | Dormant | 100 | (5) |
Costain International Limited* | Dormant | 100 | (1) |
Costain Management Design Limited | Dormant | 100 | (1) |
Costain Minerals Inc. | Dormant | 100 | (5) |
Costain Mining Services Inc. | Dormant | 100 | (5) |
Costain Oil, Gas & Process (Nigeria) Limited | Dormant | 95 | (15) |
Costain Oil, Gas & Process (Overseas) Limited | Dormant | 100 | (1) |
Costain Process Construction Limited | Dormant | 100 | (1) |
Costain Upstream Limited* | Trading | 100 | (2) |
JBCC Rhead PTE Limited | Dissolved Nov 2024 | 100 | (11) |
Promanex (Civils & Industrial Services) Limited | Dormant | 100 | (1) |
Promanex (Construction & Maintenance Services) Limited | Dormant | 100 | (1) |
Promanex (Total FM & Environmental Services) Limited* | Dormant | 100 | (1) |
Sunland Mining Corporation (II) | Dormant | 100 | (5) |
Westminster Plant Co. Limited | Dormant | 100 | (1) |
Costain Group PLC | Annual Report and Accounts 2024184
Notes to the Financial Statements continued
24 Subsidiary undertakings, joint ventures, associates and joint operations continued
| Registered | |||
| Percentage of | office/principal place | ||
| Status | equity held | of business | |
| Other joint ventures or associates owned indirectly by Costain Group PLC | |||
ACM Health Solutions Limited | Dormant | 33.3 | (4) |
Brighton & Hove 4Delivery Limited | Trading | 49 | (3) |
Budimex & Costain SP ZO.O | Dormant | 50 | (13) |
Costain Abu Dhabi Co WLL | Dormant | 49 | (8) |
China Harbour-Costain Mexico S de RL de CV | Dormant | 50 | (12) |
Jalal Costain WLL | Dormant | 49 | (9) |
Nesma-Costain Process Co. Limited | Dormant | 50 | (10) |
| Percentage | Country | ||
| Activity | interest | of business | |
| Other joint operations, including completed | |||
| ACTUS Joint Venture – Trawsfynydd nuclear power station | |||
active waste retrieval | Civil Engineering | 25 | UK |
Alstom-Babcock-Costain Joint Venture – Edinburgh to Glasgow Rail Improvement Programme | Rail Engineering | 33.3 | UK |
Alstom-Costain C644 Joint Venture – Traction power – Crossrail | Rail Engineering | 32.5 | UK |
Alstom-Costain C650 Joint Venture – HV power supply – Crossrail | Rail Engineering | 32.5 | UK |
| Amec-Costain-Jacobs Joint Venture – Magnox ILW Management | |||
Programme | Civil Engineering | 33.3 | UK |
A-one+ Integrated Highway Services – MAC 7 | Engineering and Maintenance | 33.3 | UK |
A-one+ Integrated Highway Services – MAC 10 | Engineering and Maintenance | 25 | UK |
A-one+ Integrated Highway Services – MAC 12 | Engineering and Maintenance | 33.3 | UK |
A-one+ Integrated Highway Services – MAC 14 | Engineering and Maintenance | 33.3 | UK |
A-one+ Joint Venture – ASC area 4 – Highways England | Engineering and Maintenance | 33.3 | UK |
ATC Joint Venture – C610 – Crossrail | Rail Engineering | 32.5 | UK |
ATC Joint Venture – C695 – Crossrail | Rail Engineering | 32.5 | UK |
| Balfour Beatty-BmJV-Carillion-Costain Joint Venture – | |||
National Major Projects – Highways England | Civil Engineering | 29 | UK |
| CosMott Joint Venture – Devonport Major Infrastructure | |||
Programme – Construction Delivery Partner | Consultancy | 50 | UK |
Costain Arup Joint Venture – Yorkshire Water | Consultancy | 50 | UK |
Costain-CH2M UK – ESCC JV – East Sussex highway maintenance | Engineering and Maintenance | 50 | UK |
| Costain-Dalekovod Joint Venture – National Grid HV Overhead | |||
Line System | Engineering | 60 | UK |
Costain-Hochtief Joint Venture – Reading station | Civil Engineering | 50 | UK |
Costain-Lafarge Joint Venture – East and South East Framework | Civil Engineering | 50 | UK |
Costain-Lafarge Joint Venture – Midlands Framework | Civil Engineering | 50 | UK |
Costain-Laing O’Rourke Joint Venture – Bond Street station | Civil Engineering | 50 | UK |
Costain-Laing O’Rourke Joint Venture – Farringdon station | Civil Engineering | 50 | UK |
185
Strategic ReportOverview Governance Financial Statements
| Country | |||
Activity | Percentage interest | of business | |
| Other joint operations, including completed continued | |||
| (1) Seventh Floor, 70 St Mary Axe, London, EC3A 8BE, England | ||
| (2) Neo House, Riverside, Aberdeen, AB11 7LH, Scotland | ||
(3) | 210 | Pentonville Road, London, N1 9JY, England |
| (4) Booths Park, Chelford Road, Knutsford, WA16 8QZ, England | ||
(5) | The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 (New Castle County), USA | |
| (6) Alstom, Litchurch Lane, Derby, DE24 8AD, England | ||
(7) | P.O.Box N-7768, Bank Lane, Nassau, Bahamas | |
| (8) Dormant company – Abu Dhabi, UAE, no record of address | ||
| (9) Flat 33, Building 232, Road 18, Block 321, Manama, Bahrain | ||
(10) | P.O.Box 6967, 21452, | Jeddah, Saudi Arabia |
(11) | Peninsula Plaza #27–01, 111 North Bridge Road, 179098, Singapore | |
(12) | Calle Delfines No. 268 – 2, Frac. Playa Ensenada, Ensenada, B.C., CP. 22880, Mexico | |
| (13) Marszałkowska 82, Warsaw, Mazowieckie, 00–517, Poland | ||
| (14) Dormant company – Venezuela, no record of address | ||
| (15) Dormant company – Nigeria, no record of address | ||
Costain Group PLC | Annual Report and Accounts 2024186
Notes to the Financial Statements continued
2024 | 2023 | |||||
| Joint ventures | Joint | Joint ventures | Joint | |||
| and associates | operations | Total | and associates | operations | Total | |
| £m | £m | £m | £m | £m | £m | |
Joint operations revenue | – | 545.2 | 545.2 | – | 564.6 | 564.6 |
Services of Group employees | – | 86.7 | 86.7 | – | 98.4 | 98.3 |
Construction services and materials | – | 18.4 | 18.4 | – | 20.9 | 20.9 |
– | 650.3 | 650.3 | – | 683.9 | 683.9 |
| Group | ||
| 2024 | 2023 | |
| £m | £m | |
Directors’ emoluments | 1.4 | 1.3 |
Executive officers’ emoluments | 2.2 | 2.0 |
Post-employment benefits | 0.2 | 0.1 |
Termination benefits | – | 0.2 |
Share-based payments | 2.0 | 1.5 |
5.8 | 5.1 |
187
Strategic ReportOverview Governance Financial Statements
| As reported | As restated | |
| 2023 | 2023 | |
| £m | £m | |
Other receivables | 6.6 | 22.3 |
Accruals and deferred income | 100.1 | 115.8 |
| As reported | As restated | |
| 2023 | 2023 | |
| £m | £m | |
Contract assets | 26.9 | 84.8 |
Contract liabilities | (5.1) | (63.0) |
| As reported | As restated | |
| 2023 | 2023 | |
| £m | £m | |
Cash and cash equivalents – with restrictions at 1 January | – | 10.3 |
Cash and cash equivalents – with restrictions at 31 December | – | 24.4 |
Trade receivables | 92.5 | 68.1 |
27 Events after the reporting date
There are no events after the reporting date.
Costain Group PLC | Annual Report and Accounts 2024188
Five-YearFinancialSummary
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
Revenue and profit
Revenue 1,251.1 1,332.0 1,421.4 1,135.2 978.4
Contract adjustments – – – 43.4 92.1
Adjusted revenue 1,251.1 1,332.0 1,421.4 1,178.6 1,070.5
Adjusted operating profit 43.1 40.1 36.3 30.1 18.0
Adjusting items – contract adjustments – – – (39.2) (99.7)
Adjusting items – other (12.0) (13.3) (1.4) (0.4) (10.3)
Operating profit/(loss) 31.1 26.8 34.9 (9.5) (92.0)
Share of results of joint ventures and associates – – – – 0.2
Profit/(loss) from operations 31.1 26.8 34.9 (9.5) (91.8)
Finance income 9.3 8.0 1.8 0.1 0.8
Finance expense (3.9) (3.9) (3.9) (3.9) (5.1)
Net finance income/(expense) 5.4 4.1 (2.1) (3.8) (4.3)
Profit/(loss) before tax 36.5 30.9 32.8 (13.3) (96.1)
Taxation (5.9) (8.8) (6.9) 7.5 18.1
Profit/(loss) for the year attributable to equity holders of the Parent 30.6 22.1 25.9 (5.8) (78.0)
Earnings/(loss) per share – basic 11.3p 8.1p 9.4p (2.1)p (36.7)p
Earnings/(loss) per share – diluted 11.1p 7.8p 9.4p (2.1)p (36.7)p
Dividends per ordinary share
Final 2.0p 0.8p – – –
Interim 0.4p 0.4p – – –
Summarised consolidated statement of financial position
Intangible assets 51.2 45.7 52.2 52.5 52.1
Property, plant and equipment 35.3 26.8 32.0 32.0 39.9
Investments in and loans to equity accounted joint ventures
and associates 0.4 0.4 0.4 0.4 0.4
Retirement benefit asset 54.9 53.5 60.2 67.1 –
Other non-current assets 12.9 17.7 22.0 20.9 27.1
Total non-current assets 154.7 144.1 166.8 172.9 119.5
Current assets (as restated)* 392.5 398.1 320.8 359.5 370.4
Total assets (as restated)* 547.2 542.2 487.6 532.4 489.9
Current liabilities (as restated)* 296.9 306.6 253.1 281.4 266.3
Retirement benefit obligations – – – – 5.6
Other non-current liabilities 14.6 16.2 23.3 52.0 61.5
Total liabilities (as restated)* 311.5 322.8 276.4 333.4 333.4
Equity attributable to equity holders of the Parent 235.7 219.4 211.2 199.0 156.5
* See note 26 for more information on restatements.
189
Strategic ReportOverview Governance Financial Statements
FinancialCalendarandOtherShareholderInformation
Financial calendar
1
Full-year results 2024 11 March 2025
Annual General Meeting 15 May 2025
Final Dividend payment date
2
29 May 2025
Half-year end 2025 30 June 2025
Half-year results 2025 20 August 2025
Financial year-end 2025 31 December 2025
1 The financial calendar may be updated from time to time throughout the year. Please refer to the Investors section of our website at www.costain.com for up-to-date details.
2 Subject to shareholder approval at the Annual General Meeting to be held on 15 May 2025.
Scrip dividend scheme
Subject to shareholder approval of the final dividend and renewal of the scrip dividend scheme at the 2025 Annual General Meeting, a
scrip dividend scheme will be offered in respect of the final dividend. Those shareholders who have already elected to join the scheme
will automatically have their dividend sent to them in this form.
Shareholders wishing to join the scheme for all future dividends should return a completed mandate form to the Registrar, EQ. Copies of
the mandate form and the scrip dividend brochure can be downloaded from the Company’s website at www.costain.com or obtained
from EQ by telephoning +44 (0)371 384 2268* (please use the country code if calling from outside the UK).
Dividend mandate
Shareholders can arrange to have their dividends paid directly into their bank or building society account, by completing a bank mandate
form. The advantages of using this service are:
• the payment is more secure as you can avoid the risk of cheques becoming lost in the post;
• it avoids paying in a cheque; and
• there is no risk of stolen or out-of-date cheques.
A mandate form can be obtained from the Company’s website, or by contacting EQ on +44 (0)371 384 2250* (please use the country
code if calling from outside the UK) and can also be obtained via the shareholder website at www.shareview.co.uk (see overleaf for
further details). Overseas shareholders can arrange for their dividends to be paid in their local currency and more information can be
obtained from www.shareview.co.uk/overseas.
Analysis of shareholders
asat6March2025
Total number
of holdings
Percentage
of holders
Total number
of shares
Percentage
of issued capital
Shareholdings 100,000 and more 161 2.11 258,648,363 96.24
Shareholdings 50,000–99,999 44 0.58 3,131,886 1.17
Shareholdings 25,000–49,999 42 0.55 1,415,949 0.53
Shareholdings 5,000–24,999 296 3.87 3,045,691 1.13
Shareholdings 1–4,999 7,102 92.90 2,524,198 0.94
Totals 7,645 100 268,766,087 100
Secretary
Nicole Geoghegan
Registered Office
Seventh Floor, 70 St Mary Axe, London, EC3A 8BE, United Kingdom
Telephone 020 3922 0600
www.costain.com
Company Number 1393773
* Lines are open Monday to Friday 08.30am to 5.30pm, excluding public holidays in England and Wales.
Costain Group PLC | Annual Report and Accounts 2024190
Registrar
EQ, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA.
Telephone +44 (0)371 384 2250* (please use the country code if calling from outside the UK).
Website
www.shareview.co.uk
Shareview service
The Shareview service from our registrar, EQ, allows shareholders to manage their shareholding online, giving:
• direct access to data held on their behalf on the share register including recent share movements, indicative valuations and dividend
details; and
• the ability to change their address or dividend payment instructions online.
To sign up for Shareview you need the Shareholder Reference Number printed on your notice of availability, proxy form or dividend
stationery. There is no charge to register.
When you register with the site, at www.shareview.co.uk, you can register your preferred format (post or email) for shareholder
communications. If you select email as your mailing preference, you will be notified of various shareholder communications, such as
annual results, by email instead of post.
When dividends are paid, if you have them paid straight to your bank account, and you have selected email as your mailing preference,
you can also collect your ‘dividend tax confirmation’ electronically. Instead of receiving the paper ‘dividend tax confirmation’, you will be
contacted by email with details of how to download your electronic version. Visit the website at www.shareview.co.uk for more details.
Details of software and equipment requirements are given on the website.
Bereavement services
In the event of the death of a shareholder the next of kin or administrator of the estate should contact our registrar, EQ. EQ have a
Designated Bereavement Services Helpline on +44 (0)371 384 2793* (please use the country code if calling from outside the UK).
You will be asked to supply a certified copy or the original of the death certificate, together with an appropriate authority to deal
with the estate, such as a Grant of Probate.
Further information is available on www.shareview.co.uk
Unsolicited mail
The Company is legally obliged to make its share register available to the general public. Consequently, some shareholders may receive
unsolicited mail, including correspondence from unauthorised investment firms. Shareholders who wish to limit the amount of unsolicited
mail they receive can contact The Mailing Preference Service at www.mpsonline.org.uk or on 0207 291 3310.
Further guidance can also be found on the Company’s website at www.costain.com
ShareGift
The Orr Mackintosh Foundation (ShareGift – Registered Charity No. 1052686) operates a charity share donation scheme for shareholders
with small parcels of shares whose value makes it uneconomical to sell them. Details of the scheme are available on the ShareGift
website at www.sharegift.org. EQ can provide stock transfer forms on request. Donating shares to charity in this way gives rise neither
to a gain nor a loss for Capital Gains Tax purposes and the service is free of charge.
Website
The Company’s website at www.costain.com provides information about the Group including its strategy and recent news. The
‘Investors’ section is a key source of information for shareholders, containing details of financial results, shareholder meetings and
dividends. Current and past annual reports are also available to view and download.
* Lines are open Monday to Friday 08.30am to 5.30pm, excluding public holidays in England and Wales.
FinancialCalendarandOtherShareholderInformation continued
191
Strategic ReportOverview Governance Financial Statements
Notes
Costain Group PLC | Annual Report and Accounts 2024192
Notes continued
193
CBP030069
Contactus
We are committed to engaging in dialogue with all our stakeholders.
For investor relations enquiries, please contact: ir@costain.com
For media enquiries, please contact: mediaenquiries@costain.com
Accreditations
ISO 9001 Quality Management System.
ISO 14001 Environmental Management.
ISO 45001 Occupational Health and Safety.
ISO 27001 Information Security Management.
ISO 22301 Business Continuity Management.
ISO 44001 Collaborative Business Relationships.
ISO 20000-1 IT Service Management.
PAS 2080 Carbon Management in Infrastructure.
TickITplus Systems and Software Development and Support.
Strategic ReportOverview Governance Financial Statements
Printed by a Carbon Neutral Operation (certified: CarbonQuota) under the
PAS2060 standard.
Printed on material from well-managed, FSC™ certified forests and other controlled
sources. This publication was printed by an FSC™ certified printer that holds an
ISO 14001 certification.
100% of the inks used are HP Indigo ElectroInk which complies with RoHS
legislation and meets the chemical requirements of the Nordic Ecolabel (Nordic
Swan) for printing companies, 95% of press chemicals are recycled for further use
and, on average 99% of any waste associated with this production will be recycled
and the remaining 1% used to generate energy.
The paper is Carbon Balanced with World Land Trust, an international conservation
charity, who offset carbon emissions through the purchase and preservation of
high conservation value land. Through protecting standing forests, under threat
of clearance, carbon is locked-in, that would otherwise be released.
Costain Group PLC
costain.com/investors
Costain Group PLC Annual Report and Accounts 2024