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"concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-216": { "value": "1 General information Costain Group PLC (the Company) is a public limited company domiciled in England and incorporated in England and Wales. The address of its registered office and principal place of business is disclosed on page 195 of this annual report. The principal activities of the Company and its subsidiary undertakings (collectively referred to as \u2018the Group\u2019) are described in the Strategic Report. The consolidated financial statements of the Company for the year ended 31 December 2022 comprise the Group and the Group\u2019s 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 13 March 2023. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-217": { "value": "1 General information Costain Group PLC (the Company) is a public limited company domiciled in England and incorporated in England and Wales. The address of its registered office and principal place of business is disclosed on page 195 of this annual report. The principal activities of the Company and its subsidiary undertakings (collectively referred to as \u2018the Group\u2019) are described in the Strategic Report. The consolidated financial statements of the Company for the year ended 31 December 2022 comprise the Group and the Group\u2019s 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 13 March 2023. 2 Summary of significant accounting policies Basis of preparation Both the Company financial statements and the Group consolidated financial statements have been prepared and approved by the directors in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. On publishing the Parent Company financial statements here together with the Group financial statements, the Company is taking advantage of the exemption in Section 408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements. These financial statements are presented in pounds sterling, rounded to the nearest hundred thousand. The financial statements are prepared on the historical cost basis, except that derivative financial instruments and pension plan assets are measured at their fair value. In preparing the financial statements of the Group we performed an assessment of the impact of climate change, with reference to the disclosures made in the Strategic report. There has been no material impact on the financial statements in the current year from the Group\u2019s assessment of the impact of climate change, including estimates and judgements made, specifically in relation to long-term contract accounting. Related risks and opportunities have been factored into future cash flow forecasts to the best of management\u2019s ability. The preparation of financial statements in conformity with UK-adopted international accounting standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The results of these form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Judgements made by management in the application of UK-adopted international accounting standards that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed later in this note. Going concern The Group\u2019s business activities and the factors likely to affect its future development, performance and position are set out in the Strategic Report. The financial position of the Group, its cash flows, liquidity position, borrowing and bonding facilities, use of financial instruments and hedging activities, exposure to credit risk and its objectives, policies and processes for managing its capital and financial risk are described in the Chief Financial Officer\u2019s review and in note 18. The Group\u2019s principal business activity involves work on the UK\u2019s infrastructure, mostly delivering long-term contracts with a number of customers. To meet its day-to-day working capital requirements, it uses cash balances provided from shareholders\u2019 capital and retained earnings and its borrowing facilities. In November 2022, the Group successfully concluded its negotiations with its bank and surety facility providers to secure a one year \u201camend and extend\u201d of its borrowing facilities. These borrowing facilities give the Group access to an RCF cash drawdown component of \u00a3125.0m with a maturity date of 24 September 2024. Notes to the Financial Statements These facilities have a leverage covenant of net debt/EBITDA \u22641.5 times, an interest covenant of EBITA/net interest payable covenant of \u22654.0 times and a liquidity covenant whereby the aggregate of, without double counting, any cash and cash equivalent investments and the available commitment under the facility does not fall below \u00a350.0m. These financial covenants are tested quarterly. As at 31 December 2022, the Group had a leverage covenant ratio of below zero (the Group had no net debt) and an interest covenant ratio of 16.1 times. As part of its contracting operations, the Group may be required to provide performance and other bonds. It satisfies these requirements by utilising its \u00a330.0m bank bonding and \u00a3250.0m surety company bonding facilities. In determining the appropriate basis of preparation of the financial statements for the year ended 31 December 2022, the directors are required to consider whether the Group and the Company can continue in operational existence for the foreseeable future, being a period of at least twelve months from the date of approval of the accounts. Having undertaken a rigorous assessment of the financial forecasts, including its liquidity and compliance with covenants, the Board considers that the Group and the Company have adequate resources to remain in operation for the foreseeable future and, therefore, have adopted the going concern basis in the preparation of the financial statements. In assessing the going concern assumption, the Board reviewed the Group\u2019s base case plans for the period to 30 June 2024, being the first covenant deadline more than 12 months after the approval of the financial statements. The directors have assumed that the current RCF remains in place with the same covenant requirements through to its current expiry date, which is beyond the end of the period reviewed for Going Concern purposes. The directors have assessed that the Group will either renew the facility thereafter or agree an alternative source of finance for the subsequent period. The base case assumes delivery of the Board approved strategic and financial plans. As part of the assessment, the Board also identified severe but plausible downsides affecting future profitability, working capital requirements and cash flow. The severe but plausible downsides include applying the aggregated impact of lower revenue, lower margins, higher working capital requirements and adverse contract settlements. Both the base case and severe but plausible forecasts show significant headroom and indicate that the Group will be able to operate within its available banking facilities and covenants throughout this period. Covenants are calculated on a rolling 12-month basis each quarter and therefore for all quarters until Q4 of FY23, and Q1 of FY24, a portion of the EBITDA/EBITA has already been earned, reducing the risk of a potential breach. Taking this into account along with the forecasts reviewed, it is considered that the EBITA/net interest covenant for the rolling 12 months to Q4 of FY23 and Q1 to Q2 of FY24 is the potential limiting factor, given the Group\u2019s strong net cash position. The Board concluded that there is sufficient liquidity headroom in the severe but plausible downside scenario, as well as headroom on the committed facilities and on the associated financial covenants. New and amended standards adopted by the Group The accounting policies set out below have been applied consistently by the Group and the Company to each period presented in these financial statements, except for the adoption of the new accounting standards noted below. The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2022: \u2022 Property, Plant and Equipment: Proceeds before intended use \u2013 Amendments to IAS 16; \u2022 Reference to the Conceptual Framework \u2013 Amendments to IFRS 3; and \u2022 Onerous Contracts \u2013 Cost of Fulfilling a Contract \u2013 Amendments to IAS 37. The Group also elected to adopt the following amendments early: \u2022 Deferred Tax related to Assets and Liabilities arising from a Single Transaction \u2013 Amendments to IAS 12. The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. Certain new accounting standards, amendments to accounting standards and interpretations have been published tha t are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the Group. These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods or on foreseeable future transactions. 2 Summary of significant accounting policies continued New and amended standards adopted by the Group continued IFRS 17 \u2018Insurance contracts\u2019 becomes effective for financial periods beginning on or after 1 January 2023. The Group does not provide insurance products or services; however, the definition of an insurance contract under IFRS 17 means that contracts, which meet certain criteria, may be considered insurance contracts, even for non-insurers. For example, contracts that provide services for a fixed fee may meet this definition, where the level of service provided is dependent on uncertain future events (e.g. repairs and maintenance contracts). The Group has a very small number of these contracts and in evaluating the impact of the new standard, consider that the impact, if any, will be immaterial to the financial statements. IFRS 17 replaces IFRS 4 and therefore guarantee contracts previously accounted for under IFRS 4 will now require to be accounted for under IFRS 9 or IFRS 17. The Group is in the process of reviewing its accounting treatment for these contracts but, given the nature of the guarantees issued, does not expect a material impact to the financial statements. Basis of consolidation (a) The Group\u2019s financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are entities controlled by the Group and control exists when the Group is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control starts until the date that control ceases. (b) Associates are operations over which power exists to exercise significant influence but not control, generally accompanied by a share of between 20% and 50% of the voting rights. Associates are accounted for using the equity method. (c) Joint ventures are those joint arrangements where control is shared with another entity, and where the Group has rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method from the date that the joint venture starts until the date that joint control of the entity ceases. (d) The presentation of investments in associates and joint ventures in the statement of financial position restricts the minimum carrying value to \u00a3nil. Where the cost of investment would be negative, due to losses incurred, then an amount up to the value of the negative position is applied to any outstanding loan balance with the investment or, where future funding commitments exist, a provision is made up to the value of the commitment. (e) Joint operations are those joint arrangements over which joint control exists, established by contractual agreement, which are not legal entities and where the parties have rights to the assets and obligations for the liabilities relating to the arrangement. Where a joint operation exists, then the Group entity involved records the assets it controls, the liabilities and expenses it incurs and its share of income. Such joint operations are reported in the consolidated financial statements on the same basis. Transactions between Group companies and joint operations eliminate on consolidation. (f) Intra-Group balances and transactions together with any unrealised gains arising from intra-Group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates, joint ventures and joint operations are eliminated to the extent of the interest in the entity or operation. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Currency translation Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to pounds sterling at the exchange rate ruling at the statement of financial position date. Foreign exchange differences arising on translation are recognised in the income statement. The assets and liabilities of the residual foreign entities are translated to pounds sterling at exchange rates ruling at the statement of financial position date. Income and expenses of foreign entities are translated to pounds sterling at rates approximating to the exchange rates ruling at the dates of these transactions. Notes to the Financial Statements continued Exchange differences arising from the translation of the net investment in the remaining foreign entities are recognised directly in equity. Those exchange differences that have arisen since 1 January 2004, the date of transition to IFRS, are presented as a separate component of equity. Cumulative exchange differences are released into the income statement upon disposal. Translation differences that arose before the date of transition to IFRS in respect of all foreign operations are not presented as a separate component. Revenue from contracts with customers The Group recognises revenue when control over the service or product is transferred to the customer and revenue is measured at the fair value of the consideration received or receivable, net of value added tax. Where the consideration is variable, the amount recognised is highly probable not to suffer a significant reversal in future. The principal source of revenue relates to work on the UK\u2019s infrastructure across transportation, water and energy. Over 90% arises under long-term contracts, which require delivery of a specified output to the customer, increasingly involving a technology element, with a large element of the works undertaken on the customer\u2019s land and perhaps taking a number of years to complete. The majority are structured in a cost reimbursement or target cost form, typically with incentive and penalty arrangements. Generally, the works specified within the contract are integrated and the customer procures the one complete package, which may incorporate design, engineering and advisory work into the scope. Where a contract comprises distinct performance obligations, each is accounted for separately. The scope of the works will often be subject to change and in the majority of contracts, the terms specify that changes are handled through compensation events. These are considered on case by case basis to determine whether they are a new, separate performance obligation and accounted for as such, or part of the original works and dealt with on a cumulative catch-up basis. On the majority of contracts, the compensation events relate to clarifications or revisions of the original works. Other design, advisory and consulting contracts requiring production of a specified scope or provision of other services, some of which may lead to the construction of the designed product, can be structured as inter-dependant or stand-alone contracts and the resulting performance obligations depend on how the customer procures the contract. Revenue includes the Group\u2019s share of revenue of joint operations. (a) Long-term contracts Revenue arises from the increase in the value of work performed and the value of services provided during the year. Where the outcome of an individual long-term contract can be estimated reliably and it is probable that the contract will be profitable, revenue and costs are recognised by reference to the stage of completion of the contract activity at the statement of financial position date. Stage of completion is assessed by reference to the proportion of contract costs incurred for the work performed to date relative to the estimated total costs. Contract costs are recognised as expenses in the period in which they are incurred. Compensation events, variations and claims, gain from pain/gain arrangements and other bonus assessments are included in revenue where it is highly probable that the amount, which can be measured reliably, will be recovered from the customer and will not reverse. Pain from pain/gain arrangements is included where incurred or expected to be incurred. Revenue in respect of these items is determined on the most likely outcome method. When the outcome of a long-term contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred, where it is highly probable those costs will be recoverable and will not reverse. When it is probable that total contract costs will exceed total revenue, the expected loss is recognised as an expense immediately. Contract work in progress is stated at cost plus profit recognised to date, including compensation events not yet agreed but considered highly probable, less a provision for foreseeable losses and less amounts billed and is included in contract assets. Amounts valued and billed to customers are included in trade receivables. Where cash received from customers exceeds the value of work performed, the amount is included in contract liabilities. Any reversal of revenue arising from a change that occurs in the current year but affects the previously recognised position is recognised within revenue for the current year. (b) Revenue from other services contracts Revenue from other services contracts is recognised when the service is provided. The revenue recognised is the amount that can be measured reliably and is highly probable to flow to the Group and not reverse. Once the asset is complete, subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates, otherwise expenditure is expensed as incurred. Amortisation begins when an asset is acquired or, in the case of computer software and other development assets, is available for use and is amortised over the following periods: Customer relationships \u2013 on a straight-line basis up to seven years Other intangibles (including other acquired) \u2013 on a straight-line basis up to five years Property, plant and equipment Property, plant and equipment is carried at cost less accumulated depreciation and impairment losses. Where parts of an item of property, plant and equipment have different useful lives, they are accounted as separate items. Cost comprises purchase price and directly attributable costs. Freehold land is not depreciated. For all other property, plant and equipment, depreciation is calculated on a straight-line basis to allocate cost less residual values of the assets over their estimated useful lives as follows: Freehold buildings \u2013 50 years Leasehold buildings \u2013 shorter of 50 years or lease term Plant and equipment \u2013 3 to 10 years The assets\u2019 residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of financial position date. Investments \u2013 Company Company investments in subsidiaries are carried at cost less provisions for impairment. Impairment of non-financial assets For the purposes of impairment testing, goodwill is allocated to the cash generating units expected to benefit from the synergies of the combination. Cash generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. The carrying amounts of other non-financial assets, except deferred tax assets, are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset\u2019s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset, or its cash generating unit, is less than the recoverable amount. Impairment losses are recognised in the income statement. An impairment loss (other than in relation to goodwill) is reversed if there has been a change in estimates, resulting in the recoverable amount exceeding the impaired carrying value of the asset. An impairment loss is reversed only to the extent that the carrying amount of the assets does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Provisions A provision is recognised in the statement of financial position when there is a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. A provision for onerous contracts is recognised when the expected benefits to be derived from a contract are lower than the unavoidable cost of meeting the obligations under the contract. Notes to the Financial Statements continued 2 Summary of significant accounting policies continued Taxation The tax expense represents the sum of UK corporation tax and overseas tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it excludes items that are never taxable or deductible. The liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all temporary differences except for those specific exemptions set out below and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each statement of financial position date. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of other assets and liabilities (other than in a business combination) in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for temporary differences arising on investments in subsidiaries and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates based on those enacted or substantially enacted at the statement of financial position date. Deferred tax is charged or credited in the income statement except when it relates to items charged or credited directly to equity, in which case the deferred tax is also recognised in equity. Additional taxes arising from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. Leases Where the Group is party to a lease, except for short-term leases or leases of low value assets (as noted below), the Group recognises a right-of-use asset and a lease liability upon lease commencement. The major categories of leased items within the scope of IFRS 16 are properties, vehicles and site plant. Changes to contract scope can lengthen or shorten contract programmes and result in extensions or early terminations to site plant lease terms. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, any initial direct costs incurred and an estimate of costs to dismantle and remove or to restore the underlying asset or the site on which is located, less any lease incentives received. The asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the end of lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is reduced by any impairment losses and adjusted for certain remeasurements of the lease liability associated with changes to the lease term. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the incremental borrowing rate. The amount charged to the income statement comprises the depreciation of the right-of-use asset and the imputed interest on the lease liability. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less. 2 Summary of significant accounting policies continued Revenue from contracts with customers continued (c) Other income Rental income is recognised in the income statement on a straight-line basis over the term of the lease. Insurance claims are recognised when they are considered virtually certain. Income statement presentation \u2013 Adjusting items To aid understanding of the underlying and overall performance of the Group, certain amounts that the Board considers to be material or non-recurring in size or nature or related to the accounting treatment of acquisitions are adjusted because they are not long-term in nature and will not reflect the long-term performance of the Group. Presenting results on this adjusted basis is consistent with the internal reporting presented to the Board. The directors exercise judgement in determining the classification of certain items as adjusting using quantitative and qualitative factors. In assessing whether an item is an adjusting item, the directors give consideration, both individually and collectively, as to an item\u2019s size, the specific circumstances which have led to the item arising and if the item is likely to recur, or whether the matter forms part of a group of similar items. The separate presentation of these items is intended to enhance understanding of the financial performance of the Group in the particular year under review and the extent to which results are influenced by material unusual and/or non-recurring items. The tax impact of the above is shown in note 3 to the financial statements on the taxation line. Consequently, the Group is disclosing as supplementary information \u2018Adjusted revenue, Adjusted profit and Adjusted earnings per share\u2019 alternative performance measurements. These are reconciled to statutory numbers in note 3 and reported in the presentation of segmental reporting in note 4. The Group also presents net cash/bank debt as an alternative performance measure. The directors consider that this provides useful information about the Group\u2019s liquidity position. Pre-contract costs Costs associated with bidding for contracts are written off as incurred. Research and development Research and development activities are usually directly attributable to a project and accounted for within project costs. In line with common practice, the Group has adopted the research and development expenditure credit (RDEC) regime as these credits have characteristics similar to government grants. Development expenditure that satisfies all the relevant conditions is capitalised as an intangible asset (see below). Goodwill and other intangible assets Goodwill arising on acquisitions represents the excess of the fair value of the consideration over the identifiable assets, liabilities and contingent liabilities of the acquired entity and goodwill arising on the acquisition of subsidiaries is included in non-current assets. The attributable costs of acquisitions are expensed to the income statement. Goodwill is reviewed annually for impairment and is carried at cost less accumulated impairment losses. Goodwill is included when determining the profit or loss on subsequent disposal of the business to which it relates. Acquired intangible assets comprise customer relationships, order book, brand and intellectual property. Other intangible assets comprise computer software, development expenditure and patents. Customer relationships and other acquired intangibles are measured at the present value of cash flows attributable to the relationship less an appropriate contributory asset charge. Computer software, development expenditure and patents are recognised at cost. Internally generated development expenditure is recognised as an intangible asset only if all of the following conditions are satisfied: \u2022 the asset can be identified; \u2022 it is probable that the asset will create future economic benefits; and \u2022 the development costs can be measured reliably. Notes to the Financial Statements continued Guarantee contracts Customers awarding long-term contracting work may, as a condition of the award, require the contractor to provide performance and other bonds. Group bank borrowing facilities and bank and surety bonding facilities are supported by cross-guarantees given by the Company and participating companies in the Group. The Company considers these to be insurance arrangements under IFRS 4 and accounts for them as such. In this respect, the guarantee contract is treated as a contingent liability until such time as it becomes probable that a payment under the guarantee will be required. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Dividends Dividends are recognised as distributions in the period in which they are declared. Dividends proposed but not declared are not recognised but are disclosed in note 11 to the financial statements. Share-based payments These comprise equity-settled share-based compensation plans. Equity-settled share-based payments are measured at fair value at the date of grant and the fair value is expensed over the vesting period, based on the estimate of awards that will eventually vest. Fair value is measured using a Black- Scholes option pricing model. Where options over shares in the Company are granted to employees of subsidiaries, the Company recognises in its financial statements an increase in the cost of investment in its subsidiaries equivalent to the equity-settled share-based payment charge recognised in its subsidiaries\u2019 financial statements, with the corresponding credit being recognised directly in equity. Retirement benefit obligations A defined benefit pension scheme is operated in the UK, which provides benefits based on pensionable salary. The details are included in note 21. The assets of the scheme are held separately from those of the Group. Pension scheme assets are measured using market values. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high-quality corporate bond of equivalent term and currency to the liability. The liability or asset recognised in the statement of financial position in respect of the defined benefit pension scheme is the difference between the present value of the defined benefit obligations and the fair value of scheme assets at the statement of financial position date. An asset is recognised because any surplus on the Costain Pension Scheme would be recoverable by way of a refund, as the Group has the unconditional right to any surplus once all the obligations of the Scheme have been settled. Administration costs of the scheme are recognised in the income statement. The interest income or cost on the scheme\u2019s net asset or liabilities is included in net finance expense. Remeasurements of the net asset or liability are recognised in the consolidated statement of comprehensive income. Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. Financial assets and liabilities Financial assets and financial liabilities are recognised in the Group\u2019s statement of financial position when the Group becomes a party to the contractual provisions of the instrument. (a) Financial assets The classification depends on the nature and purpose of the financial asset and is determined at the time of initial recognition. A financial asset is derecognised only when the contractual rights to the cash flows from that asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. Notes to the Financial Statements continued 2 Summary of significant accounting policies continued Financial assets and liabilities continued (a) Financial assets continued Trade and other receivables Trade and other receivables do not carry interest and are stated at amortised cost less loss allowances. Trade receivables mostly relate to long-term contracts. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. This policy applies to both the statement of financial position and the cash flow statement. Impairment of financial assets Impairment of financial assets is based on an expected credit loss model applying the simplified approach permitted under IFRS 9. The Group calculates an allowance for credit losses based on the nature of the customer, experience of collecting receivables from similar customers and modelling default scenarios and applying probabilities of such scenarios. (b) Financial liabilities Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. Financial liabilities are derecognised only when the obligations are discharged, cancelled or expire. Trade and other payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. (c) Derivative financial instruments Derivative financial instruments are used to manage risks arising from changes in foreign exchange rates and interest rates and are measured at their fair value as explained in the cash flow hedges section of note 18. Certain derivative financial instruments are designated as cash flow hedges in line with established risk management policies. These hedge exposure to variability in cash flows that is attributable to either a particular risk associated with a recognised asset or liability or a forecast transaction. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in equity, with any ineffective portion in the income statement. When hedged cash flows result in the recognition of a non-financial asset or liability, the associated gains or losses previously recognised in equity are included in the initial measurement of the asset or liability. For all other cash flow hedges, the gains or losses that are recognised in equity are transferred to the income statement in the same period in which the hedged cash flow affects the income statement. Hedge accounting is discontinued when the hedging instrument expires or is sold, is terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss previously recognised in equity is retained in equity until the hedged transaction occurs. If the hedged transaction is no longer expected to occur, the net cumulative gain or loss is transferred to the income statement. Any gains or losses arising from changes in fair value of derivative financial instruments not designated as hedges are recognised in the income statement. Fair value measurement When measuring the fair value of a financial or non-financial asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: \u2022 Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. \u2022 Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). \u2022 Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair valu e hierarchy, then the fair value measurement is categorised in its entirety in the same level of the hierarchy as the lowest level input that is significant to the entire measurement. Significant areas of judgement and estimation The estimates and underlying assumptions used in the preparation of these financial statements are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The most critical accounting policies and significant areas of estimation and judgement arise from the accounting for long- term contracts under IFRS 15 \u2018Revenue from Contracts with Customers\u2019, the carrying value of goodwill, the assumptions used in the accounting for defined benefit pension schemes under IAS 19 \u2018Employee benefits\u2019, the recognition of deferred tax assets in relation to tax losses and the items classified as other items and contract adjustments. Long-term contracts The majority of the Group\u2019s activities are undertaken via long-term contracts and IFRS 15 requires the identification and separation of individual, distinct performance obligations, which are then accounted for individually. The most common type of contracts undertaken by the Group with multiple performance obligations are framework contracts. In most cases, the obligations are satisfied over time and estimates are made of the total contract costs and revenues. In many cases, these obligations span more than one financial period. Both cost and revenue forecasts may be affected by a number of uncertainties that depend on the outcome of future events and may need to be revised as events unfold and uncertainties are resolved. Cost forecasts take into account the expectations of work to be undertaken on the contract. Revenue forecasts take into account compensation events, variations and claims and assessments, for example, of the impact of pain/gain arrangements to the extent that the amounts the Group expects to recover can be reliably estimated and are highly probable not to reverse. Management bases its estimates of costs and revenues and its assessment of the expected outcome of each long- term contractual obligation on the latest available information. This includes detailed contract valuations, progress on discussions over compensation events, variations and claims with customers, progress against the latest programme for completing the works, forecasts of the costs to complete and, in certain cases, assessments of recoveries from insurers, suppliers and contractors, where these are considered virtually certain. Revenue is recognised to the extent that amounts forecast from compensation events, variations and claims are agreed or considered in management\u2019s judgement highly probable to be agreed. There are four material contracts where management has been required to make significant accounting estimates and, which result in estimation uncertainty, as at 31 December 2022. In relation to these contracts, the Group has included estimated recoveries with a combined value of \u00a312.2m, on the basis that these are considered highly probable not to reverse. However, there are a range of factors which will affect the ultimate outcome once these contracts are finalised. Management considers that the estimation uncertainty in relation to these four contracts ranges from a potential upside of \u00a322.6m to a downside of \u00a312.2m. The ultimate financial impact of this estimation uncertainty will depend, inter alia, on the terms of the contract and the interaction with incentive arrangements, such as pain/gain mechanisms and bonus or KPI arrangements, as well as final conclusions regarding claims and compensation events and assessments of, for example, costs disallowed under the contract. Notes to the Financial Statements continued 2 Summary of significant accounting policies continued Significant areas of judgement and estimation continued Long-term contracts continued The estimates of the forecast contract outcome and the profit or loss earned to date are updated regularly and significant changes are highlighted through established internal review procedures. The impact of any change in the accounting estimates both positive and negative is then reflected in the financial statements. While management believes it has recorded positions that are highly probable not to reverse on the basis of existing facts and circumstances, there are uncertain factors which will impact the final contract outcome and could give rise to material adjustments within the next financial year. Given the inherent complexity and pervasive impact of the various judgements and estimates impacting revenue, cost of sales and related balance sheet amounts, it is not considered plausible to quantify the impact of taking alternative assessments on each of these judgements. Rectification provision: Contract in the water sector In 2021, Costain recognised a provision of \u00a36.2m in respect of the estimated future costs of expected rectification works required at a customer\u2019s water treatment facility where the Group had been prime contractor. During 2022, working with designers, insurers and the customer, there is now greater clarity as to the scope and cost of rectification work required, albeit a final solution has yet to be formally agreed with all relevant parties. As at 31 December 2022, the Group\u2019s best estimate of the cost of the single most likely rectification solution is \u00a317.0m, of which costs of \u00a34.8m have been incurred. Accordingly a provision of \u00a312.2m has been included in the statement of financial position and disclosed in note 20. The work is expected to be concluded in 2024. Whilst the cost of rectification work is capable of being estimated, a number of assumptions have had to be made in arriving at the cost estimate. This, combined with the fact that the final design solution has not been finalised, results in there being inherent estimation uncertainty in determining the ultimate cost and associated provision. Management considers that the ultimate cost will fall within a range of \u00b130% of the estimated total cost of \u00a317m. Costain has engaged with its insurers and received confirmation that insurance cover is available and that all reasonable costs of rectification work that are validly incurred will be met by insurers. Consistent with this, insurers made an interim payment on account during 2022. On this basis, management has made a judgement that the costs of rectification, after deduction of insurers\u2019 excess and amounts already received from insurers, will be recovered. Accordingly, an insurance receivable of \u00a313.4m has been recognised in the statement of financial position in accordance with IAS 37 on the basis that recovery is considered virtually certain. There is a cap on insurance but the cap is significantly in excess of the cost estimate. As at 31 December 2021, discussions with insurers were at an early stage and the expected recovery from insurers was not recognised as a receivable on the basis that it could not be considered virtually certain. Peterborough & Huntingdon On 24 February 2022, Costain announced that it had reached a final settlement with National Grid regarding the Peterborough & Huntingdon contract. The settlement agreement brought an end to the dispute after the contract was mutually terminated in June 2020 and prevents any further claims under the contract. In 2022, Costain made a full and final payment of \u00a343.4m to National Grid (which was fully provided for in 2021) and recognised a \u00a35.2m insurance recovery. Also see note 3. Carrying value of goodwill Assessing the recoverability of the carrying value of goodwill recognised on acquisition requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. These assessments involve estimation and judgement, principally, in respect of the levels of operating margins, growth rates and future cash flows of the cash generating units and also include consideration of the impact of potential sensitivities in respect of those assumptions. The discount rates used to calculate present values and related sensitivities are set out in note 12. Defined benefit pension scheme Defined benefit pension schemes require significant estimates in relation to the assumptions for the discount rate, inflation and member longevity that underpin the valuation. Each year in selecting the appropriate assumptions, the directors take advice from an independent qualified actuary. The assumptions and resultant sensitivities are set out in note 21. Deferred tax Included in deferred tax assets is an asset for tax losses recorded in current and prior years. The asset is recognised on the basis that the losses will be used against future taxable profits of the Group over the next five years. The significant judgement in assessing the recoverability relates to the ability of the Group to achieve its taxable profit forecasts and the ability to withstand the application of what the Board considers appropriate sensitivities. Details of deferred tax assets are shown in note 9. Adjusting items As described in this note, management has used judgement to determine the items classified as adjusting items and set out in note 3. 3 Reconciliation of reported revenue and operating profit/(loss) to adjusted revenue and operating profit Adjusted revenue, operating profit and earnings per share are presented as non-GAAP alternative performance measurements. 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. The revenue adjustments represent the reversal of the contract asset recorded in the statement of financial position immediately prior to the initial write down and any subsequent adjustment to overall contract revenue. Peterborough & Huntingdon During the year, a \u00a35.2m insurance receipt was recognised in relation to the Peterborough & Huntingdon contract outcome. In 2021, a \u00a343.4m provision was recognised in relation to the full and final settlement agreed with National Grid. Costain made a full and final payment of \u00a343.4m to National Grid in the first quarter of 2022. Related legal and other costs of \u00a34.2m were also incurred and expensed during the period ended 31 December 2021. These costs were recognised as adjusting items and therefore the related credit has also been treated as such. Other items During the year, Costain has embarked on a Transformation programme to deliver operational efficiencies. In 2022, the Group incurred \u00a35.0m (2021: \u00a3nil) of restructuring costs and \u00a30.7m (2021: \u00a3nil) of reorganisation costs. During the year, the Group sold a minor stake in a hotel company for \u00a30.5m. The investment was impaired to nil in 2020 reflecting the significant impact of COVID-19 in that sector, so the profit realised this year is also \u00a30.5m. This cost was recognised as an adjusting item and therefore the related profit has also been treated as such. During the year, the Group fully impaired tunnel boring machines held at net book value of \u00a31.4m which were outmoded and no longer core to operations. In 2022, the Group incurred \u00a3nil (2021: \u00a30.4m) amortisation on acquired intangibles as these are now carried at net book value \u00a3nil. In 2021, the Group also recognised a profit of \u00a38.4m on the A465 Heads of the Valley Road contract as a result of lower costs to complete than forecast at the end of 2020 when a write down to the contract asset was recognised.
Notes to the Financial Statements continued
3 Reconciliation of reported revenue and operating (loss)/profit to adjusted revenue and
operating profit continued
2022
Adjusted
\u00a3m
P&H
\u00a3m
Other
items
\u00a3m
Total
\u00a3m
Revenue 1,421.4 \u2013 \u2013 1,421.4
Cost of sales (1,328.7) \u2013 \u2013 (1,328.7)
Gross profit 92.7 \u2013 \u2013 92.7
Administrative expenses before other items (56.4) \u2013 \u2013 (56.4)
Other items:
P&H insurance recovery \u2013 5.2 \u2013 5.2
Transformation costs \u2013 \u2013 (5.7) (5.7)
Tunnel boring machines impairment \u2013 \u2013 (1.4) (1.4)
Profit on disposal of other investment \u2013 \u2013 0.5 0.5
Administrative expenses (56.4) 5.2 (6.6) (57.8)
Operating profit/(loss) 36.3 5.2 (6.6) 34.9
Share of results of joint ventures and associates \u2013 \u2013 \u2013 \u2013
Profit/(loss) from operations 36.3 5.2 (6.6) 34.9
Net finance expense (2.1) \u2013 \u2013 (2.1)
Profit/(loss) before tax 34.2 5.2 (6.6) 32.8
Taxation (7.0) (1.0) 1.1 (6.9)
Profit/(loss) for the year attributable to equity holders of the Parent 27.2 4.2 (5.5) 25.9
Basic earnings per share 9.9p 9.4p
Other
Adjusted P&H A465 items Total
2021 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue before contract adjustments
1,178.6
\u2013
\u2013
\u2013
1,178.6
Contract adjustments
\u2013
(43.4)
\u2013
(43.4)
Revenue
1,178.6
(43.4)
\u2013
\u2013
1,135.2
Cost of sales
(1,099.2)
(4.2)
8.4
\u2013
(1,095.0)
Gross profit/(loss)
79.4
(47.6)
8.4
\u2013
40.2
Administrative expenses before other items
(49.3)
\u2013
\u2013
\u2013
(49.3)
Amortisation of acquired intangible assets
\u2013
\u2013
\u2013
(0.4)
(0.4)
Administrative expenses
(49.3)
\u2013
\u2013
(0.4)
(49.7)
Operating profit/(loss)
30.1
(47.6)
8.4
(0.4)
(9.5)
Share of results of joint ventures and associates
\u2013
\u2013
\u2013
\u2013
\u2013
Profit/(loss) from operations
30.1
(47.6)
8.4
(0.4)
(9.5)
Net finance expense
(3.8)
\u2013
\u2013
\u2013
(3.8)
Profit/(loss) before tax
26.3
(47.6)
8.4
(0.4)
(13.3)
Taxation
0.1
9.0
(1.6)
\u2013
7.5
Profit/(loss) for the year attributable to equity holders of the Parent
26.4
(38.6)
6.8
(0.4)
(5.8)
Basic earnings/(loss) per share
9.6p
(2.1)p
4 Operating segments The Group has two core business segments: Natural Resources and Transportation. The core segments are strategic business units with separate management and have different core customers or offer different services. This information is provided to the Chief Executive who is the chief operating decision maker. The segments are discussed in the Strategic Report section of these financial statements. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. The Group evaluates segment performance on the basis of profit or loss from operations before interest and tax expense and before other items and contract adjustments. The segment results that are reported to the Chief Executive include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Other items are allocated to the operating segments where appropriate, but otherwise are viewed as Central items . Intersegment sales and transfers are not material. Notes to the Financial Statements continued 4 Operating segments continued
Natural
Resources Transportation Central costs Total
2022 \u00a3m \u00a3m \u00a3m \u00a3m
Segment revenue
Adjusted revenue
375.1
1,046.3
\u2013
1,421.4
Contract adjustments
\u2013
\u2013
\u2013
\u2013
Total revenue
375.1
1,046.3
\u2013
1,421.4
Segment profit/(loss)
Adjusted operating profit/(loss)
15.0
31.5
(10.2)
36.3
Contract adjustments
\u2013
\u2013
\u2013
\u2013
Operating profit/(loss) before other items
15.0
31.5
(10.2)
36.3
Share of results of joint ventures and associates
\u2013
\u2013
\u2013
\u2013
Profit/(loss) from operations before other items
15.0
31.5
(10.2)
36.3
Other items:
P&H insurance recovery
5.2
\u2013
\u2013
5.2
Transformation costs
(0.7)
\u2013
(5.0)
(5.7)
Tunnel boring machines impairment
\u2013
(1.4)
\u2013
(1.4)
Profit on disposal of other investment
\u2013
\u2013
0.5
0.5
Profit/(loss) from operations
19.5
30.1
(14.7)
34.9
Net finance expense
(2.1)
Profit before tax
32.8
Segment profit/(loss) is stated after charging the following:
Depreciation and impairment
2.4
8.9
\u2013
11.3
Amortisation and impairment
0.1
0.5
\u2013
0.6
Segment assets
Reportable segment assets
118.7
164.0
1.0
283.7
Unallocated assets:
Retirement benefit asset
60.2
Deferred tax
14.5
Cash and cash equivalents
123.8
Total assets
482.2
Expenditure on non-current assets
Property, plant and equipment
3.4
13.6
\u2013
17.0
Intangible assets
\u2013
0.3
\u2013
0.3
Segment liabilities
Reportable segment liabilities
69.7
157.3
43.8
270.8
Unallocated liabilities:
Taxation
0.2
Total liabilities
271.0
Natural
Resources Transportation Central costs Total
2021 \u00a3m \u00a3m \u00a3m \u00a3m
Segment revenue
Adjusted revenue
314.4
864.2
\u2013
1,178.6
Contract adjustments
(43.4)
\u2013
\u2013
(43.4)
Total revenue
271.0
864.2
\u2013
1,135.2
Segment profit/(loss)
Adjusted operating profit/(loss)
(2.6)
41.4
(8.7)
30.1
Contract adjustments
(47.6)
8.4
\u2013
(39.2)
Operating (loss)/profit before other items
(50.2)
49.8
(8.7)
(9.1)
Share of results of joint ventures and associates
\u2013
\u2013
\u2013
\u2013
(Loss)/profit from operations before other items
(50.2)
49.8
(8.7)
(9.1)
Amortisation of acquired intangible assets
(0.4)
\u2013
\u2013
(0.4)
(Loss)/profit from operations
(50.6)
49.8
(8.7)
(9.5)
Net finance expense
(3.8)
Loss before tax
(13.3)
Segment profit/(loss) is stated after charging the following:
Depreciation and impairment
3.4
9.5
\u2013
12.9
Amortisation and impairment (including acquired intangible assets)
0.6
0.5
\u2013
1.1
Segment assets
Reportable segment assets
111.8
178.4
0.1
290.3
Unallocated assets:
Retirement benefit asset
67.1
Deferred tax
15.4
Taxation
0.2
Cash and cash equivalents
159.4
Total assets
532.4
Expenditure on non-current assets
Property, plant and equipment
4.3
14.4
\u2013
18.7
Intangible assets
0.7
0.8
\u2013
1.5
Segment liabilities
Reportable segment liabilities
100.7
183.0
10.3
294.0
Unallocated liabilities:
Borrowings
39.4
Total liabilities
333.4
4 Operating segments continued Geographical information Segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets and exclude deferred tax assets. All revenue originates in the UK (2021: all) and all non-current assets are located in the UK (2021: all). Customers accounting for more than 10% of revenue Two customers (2021: two) in the transportation sector accounted for revenue of \u00a3853.0m (2021: \u00a3629.0m).
5 Other operating expenses and income
2022 2021
\u00a3m \u00a3m
Profit/(loss) before tax is stated after charging:
Amortisation and impairment of intangible assets (note 12)
0.6
1.1
Depreciation and impairment of property, plant and equipment (note 13)
11.3
12.9
Transformation costs (note 3)
5.7
\u2013
Expenses relating to short-term leases and leases of low value assets
62.4
41.3
and after crediting:
RDEC grant income
5.5
3.0
P&H insurance recovery (note 3)
5.2
\u2013
Profit on disposal of other investment (notes 3 and 26)
0.5
\u2013
Short-term leases mostly relate to the hiring of plant for operations on construction sites.
Auditors\u2019 remuneration
2022 2021
\u00a3m \u00a3m
Fees payable to the Group\u2019s auditors for the audit of the annual financial statements
0.1
0.1
Fees payable to the Group\u2019s auditors in respect of:
Audit of financial statements of subsidiaries of the Company
1.0
1.0
1.1
1.1
An amount of \u00a30.2m (2021: \u00a30.1m) was paid to the Group\u2019s auditors in 2022 for the independent review of the interim results and other non-audit services. Amounts paid to the Company\u2019s auditors in respect of services to the Company, other than the audit of the Company\u2019s financial statements, have not been disclosed as the information is required instead to be disclosed on a consolidated basis. Notes to the Financial Statements continued
6 Employee benefit expense
2022 2021
Group \u00a3m \u00a3m
Wages and salaries
230.4
200.3
Social security costs
26.4
21.4
Other pension costs \u2013 defined contribution schemes (note 21)
11.7
10.4
Share-based payments expense (note 21)
1.1
1.1
269.6
233.2
2022 2021
Number Number
Average number of persons employed
Natural Resources
1,718
1,549
Transportation
1,787
1,741
Central
20
21
3,525
3,311
Of the above employees one was employed overseas (2021: one). Company The Company does not employ any personnel, except for the directors considered in note 7. 7 Remuneration of directors Details of the directors\u2019 remuneration, pension entitlements, interest in the Long-Term Incentive Plans, Annual Incentive Plans, Deferred Share Bonus Plans and share options are included in the Directors\u2019 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 2022 and 2021 are detailed below.
2022 2021
\u00a3m \u00a3m
Remuneration
1.9
1.2
Post-employment benefits
0.1
\u2013
2.0
1.2
8 Net finance expense
2022 2021
\u00a3m \u00a3m
Interest income from bank deposits
0.5
0.1
Interest income on the net assets of the defined benefit pension scheme (note 21)
1.3
\u2013
Finance income
1.8
0.1
Interest payable on interest bearing bank loans, borrowings and other similar charges
(2.7)
(3.0)
Interest expense on lease liabilities
(1.2)
(0.9)
Finance expense
(3.9)
(3.9)
Net finance expense
(2.1)
(3.8)
Other similar charges includes arrangement and commitment fees payable. 9 Taxation
2022 2021
\u00a3m \u00a3m
On profit/(loss) for the year
UK corporation tax at 19% (2021: 19%)
(4.6)
\u2013
Adjustment in respect of prior years
0.3
0.1
Current tax (charge)/credit for the year
(4.3)
0.1
Deferred tax (charge)/credit for the current year
(2.5)
8.4
Adjustment in respect of prior years
(0.1)
(1.0)
Deferred tax (charge)/credit for the year
(2.6)
7.4
Tax (charge)/credit in the consolidated income statement
(6.9)
7.5
2022 2021
\u00a3m \u00a3m
Tax reconciliation
Profit/(loss) before tax
32.8
(13.3)
Taxation at 19% (2021: 19%)
(6.2)
2.5
Amounts qualifying for tax relief and disallowed expenses
(1.0)
(0.3)
Rate adjustment relating to UK deferred taxation
0.1
6.2
Adjustments in respect of prior years
0.2
(0.9)
Tax (charge)/credit in the consolidated income statement
(6.9)
7.5
Effective rate of tax
21.0%
56.4%
The tax above does not include any amounts for equity accounted joint ventures and associates, whose results are disclosed in the consolidated income statement net of tax. The current tax liability of \u00a30.2m (2021: asset of \u00a30.2m) for the Group and liability of \u00a31.2m (2021: \u00a31.6m) for the Company represent the amount of tax in respect of all outstanding periods and include the Group\u2019s best estimate of an assets and liabilities, where appropriate.
2022 2021
\u00a3m \u00a3m
Tax in other comprehensive income
Current tax \u2013 Retirement benefit assets
2.2
\u2013
Deferred tax \u2013 Retirement benefit assets
1.7
(15.6)
Tax credit/(charge) in other comprehensive income
3.9
(15.6)
Notes to the Financial Statements continued
2022 2021
\u00a3m \u00a3m
Deferred tax asset recognised
Accelerated capital allowances
2.1
0.8
Short-term temporary differences
3.2
2.7
Retirement benefit assets
(15.0)
(16.7)
Tax losses
24.2
28.6
Deferred tax asset
14.5
15.4
Deferred tax assets have been calculated at the rate of 25% (2021: 25%) or at 19% where the asset will unwind prior to April 2023. Deferred tax assets have been recognised in respect of accumulated tax trading losses in the UK of \u00a398.3m (2021: \u00a3119.5m). The deferred tax assets include an amount of \u00a324.2m (2021: \u00a328.6m) which relates to these carried forward tax losses. These have been recognised to the extent it is expected that they will be recoverable within five years (2021: six years) using the estimated future taxable income based on the approved forecasts for the Group and reasonably likely estimated future profits. These losses can be carried forward indefinitely and have no expiry date. The Company has no deferred tax asset (2021: \u00a31.0m) relating to short-term temporary differences.
2022 2021
\u00a3m \u00a3m
Analysis of deferred tax movements
At 1 January
15.4
23.6
Deferred tax in consolidated income statement
Accelerated capital allowances
1.3
(0.3)
Short-term temporary differences
0.5
1.2
Retirement benefit assets
\u2013
(2.2)
Tax losses
(4.4)
8.7
(2.6)
7.4
Deferred tax in other comprehensive income
Retirement benefit assets
1.7
(15.6)
At 31 December
14.5
15.4
Factors that may affect future tax charges In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate would increase to 25%. This rate was substantively enacted on 24th May 2021. Deferred tax balances in these financial statements have been calculated at the rate of 25% or at 19% where the asset will unwind prior to April 2023.
9 Taxation continued
Deferred tax assets not recognised
The Group and Company have deferred tax assets in their UK operations that have not been recognised at the year-end
on the basis that their future economic benefits were not assured at the statement of financial position date.
The following gross value items are available as deferred tax assets:
Group
Company
2022 2021 2022 2021
\u00a3m \u00a3m \u00a3m \u00a3m
Management expenses and charges incurred by Parent Company
54.7
54.7
54.7
54.7
Capital losses
270.6
270.6
241.0
241.0
The current year tax effect, at 19% or 25% after April 2023, of claiming short-term temporary differences and trading tax
losses was \u00a3nil (2021: \u00a3nil ) as shown in the tax reconciliation above.
There are no expiry dates associated with the deferred tax assets not recognised.
10 Earnings/(loss) per share
The calculation of earnings/(loss) per share is based on profit of \u00a325.9m (2021: loss of \u00a35.8m) and the number of shares
set out below.
2022 2021
Number Number
(millions) (millions)
Weighted average number of ordinary shares in issue for basic earnings per share calculation
275.0
274.9
Dilutive potential ordinary shares arising from employee share schemes
1.7
5.1
Weighted average number of ordinary shares in issue for diluted earnings per share calculation
276.7
280.0
At 31 December 2022, nil options were excluded from the weighted average number of ordinary shares calculation
because they were anti-dilutive (2021: nil options were excluded).
11 Dividends
No dividends were paid or recommended in respect of the year ended 31 December 2022. The Board of directors\u2019
current policy for dividends is described in note 18 a) Capital management.
Notes to the Financial Statements continued
12 Intangible assets
Other
Customer acquired Other
Goodwill relationships intangibles intangibles Total
Group \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost
At 1 January 2021
54.1
15.4
9.7
14.4
93.6
Additions
\u2013
\u2013
\u2013
1.5
1.5
At 31 December 2021
54.1
15.4
9.7
15.9
95.1
At 1 January 2022
54.1
15.4
9.7
15.9
95.1
Additions
\u2013
\u2013
\u2013
0.3
0.3
At 31 December 2022
54.1
15.4
9.7
16.2
95.4
Accumulated amortisation and impairment
At 1 January 2021
9.0
15.0
9.7
7.8
41.5
Charge in year
\u2013
0.4
\u2013
0.7
1.1
At 31 December 2021
9.0
15.4
9.7
8.5
42.6
At 1 January 2022
9.0
15.4
9.7
8.5
42.6
Charge in year
\u2013
\u2013
\u2013
0.6
0.6
At 31 December 2022
9.0
15.4
9.7
9.1
43.2
Net book value
At 31 December 2022
45.1
\u2013
\u2013
7.1
52.2
At 31 December 2021
45.1
\u2013
\u2013
7.4
52.5
At 1 January 2021
45.1
0.4
\u2013
6.6
52.1
The amortisation charges for the year are included in administration expenses. Other intangibles includes development expenditure of \u00a36.1m (2021: \u00a36.1m) primarily relating to a project in the rail sector. Goodwill has been allocated to the applicable cash generating units of the Transportation segment (\u00a315.5m (2021: \u00a315.5m)) and the Natural Resources segment (\u00a329.6m (2021: \u00a329.6m)). As described in note 2, the Group reviews the value of goodwill and in the absence of any identified impairment risks, tests are based on internal value in use calculations of the cash generating unit (CGU). The key assumptions for these calculations are: operating margins, discount rates and growth rates. Discount rates have been estimated based on pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The rate used to discount the forecast cash flows for both the Transportation and Natural Resources CGUs was 15.5%. In 2021, the discount rates used for the two CGUs were Transportation 13.2% and Natural Resources 14.3%. 13 Property, plant and equipment
Right-of-use assets
Land and Plant and Land and Vehicles, plant
buildings equipment buildings and equipment Total
Group \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost
At 1 January 2021
0.6
27.0
20.5
30.3
78.4
Additions
\u2013
0.7
1.0
17.0
18.7
Disposals
\u2013
(0.7)
(7.4)
(17.9)
(26.0)
At 31 December 2021
0.6
27.0
14.1
29.4
71.1
At 1 January 2022
0.6
27.0
14.1
29.4
71.1
Additions
\u2013
0.2
0.7
16.1
17.0
Disposals
(0.6)
(2.6)
(1.4)
(14.2)
(18.8)
At 31 December 2022
\u2013
24.6
13.4
31.3
69.3
Accumulated depreciation and impairment
At 1 January 2021
0.6
19.8
8.4
9.7
38.5
Charge in year
\u2013
2.5
3.3
7.1
12.9
Disposals
\u2013
(0.7)
(5.6)
(6.0)
(12.3)
At 31 December 2021
0.6
21.6
6.1
10.8
39.1
At 1 January 2022
0.6
21.6
6.1
10.8
39.1
Charge in year
\u2013
2.9
2 .1
4.9
9.9
Impairment in year
\u2013
1.4
\u2013
\u2013
1.4
Disposals
(0.6)
(2.6)
(0.6)
(3.9)
(7.7)
At 31 December 2022
\u2013
23.3
7.6
11.8
42.7
Net book value
At 31 December 2022
\u2013
1.3
5.8
19.5
26.6
At 31 December 2021
\u2013
5.4
8.0
18.6
32.0
At 1 January 2021
\u2013
7.2
12.1
20.6
39.9
The depreciation charges for the year are included in administration expenses.
Leased assets
Other amounts recognised in the income statement:
2022 2021
\u00a3m \u00a3m
Interest expense (included in finance expense)
1.2
0.9
Expense relating to short-term leases (included in cost of sales and administrative expenses)
62.4
41.3
The lease liabilities relating to these right-of-use assets are as follows: 2022 2021
\u00a3m \u00a3m
Current
9.1
8.6
Non-current
15.0
18.2
24 .1
26.8
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 2022. 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 Compan y has assessed the probability of loss under these guarantees as remote.
Investments in joint ventures
\u00a3m
Cost
At 1 January 2021
14.4
At 31 December 2021
14.4
At 1 January 2022
14.4
Additions
6.5
At 31 December 2022
20.9
Share of post-acquisition reserves
At 1 January 2021
(14.0)
At 31 December 2021
(14.0)
At 1 January 2022
(14.0)
At 31 December 2022
(14.0)
Impairment
At 1 January 2021
\u2013
At 31 December 2021
\u2013
At 1 January 2022
\u2013
Impairment in year
(6.5)
At 31 December 2022
(6.5)
Net book value
At 31 December 2022
0.4
At 31 December 2021
0.4
At 1 January 2021
0.4
During the year, Costain acquired \u00a36.5m of shares in an existing joint venture, ABC Electrification Ltd. In order to facilitate the settlement of the joint venture\u2019s net liabilities, consideration for these shares included a \u00a33.4m cash payment and the write down of an existing \u00a33.1m receivable owed to the Group by the joint venture. On the basis of the financial position of ABC Electrification Ltd, the Group does not expect to recover this equity investment and accordingly has booked an impairment charge of \u00a36.5m. This charge has been offset against a corresponding payable previously held in respect of these joint venture losses, in accordance with IAS 28 paragraph 39. Therefore, there has been no net impact on the consolidated income statement in the year. Notes to the Financial Statements continued
Analysis of Group share of revenue, income and assets and liabilities of joint ventures
2022
2021
Joint ventures Joint ventures
\u00a3m \u00a3m
Revenue
(0.8)
(4.1)
Profit before tax
\u2013
\u2013
Taxation
\u2013
\u2013
Profit for the year
\u2013
\u2013
Non-current assets
\u2013
\u2013
Trade and other receivables
6.1
6.0
Cash and cash equivalents
(0.1)
(0.1)
Trade and other payables \u2013 current
(5.6)
(5.5)
Non-current liabilities
\u2013
\u2013
Investments in joint ventures and associates
0.4
0.4
Dividends received by Group
\u2013
\u2013
Net interest payable by joint ventures in 2022 was \u00a3nil (2021: \u00a3nil). There was no (2021: no) interest income and interest
expense during the year.
At the year-end, there were no capital or financial commitments entered into by the joint ventures (2021: none).
Analysis of the total revenue, income, assets and liabilities of joint ventures
2022
2021
Joint ventures Joint ventures
\u00a3m \u00a3m
Revenue
(1.9)
(12.1)
Profit before tax
\u2013
\u2013
Taxation
\u2013
\u2013
Profit for the year
\u2013
\u2013
Non-current assets
\u2013
\u2013
Trade and other receivables
17.4
17. 3
Cash and cash equivalents
(0.3)
(0.3)
Trade and other payables \u2013 current
(16.1)
(16.1)
Non-current liabilities
\u2013
\u2013
Equity
1.0
0.9
There is no other comprehensive income/(expense) in respect of joint ventures or associates.
14 Investments in subsidiaries, equity accounted joint ventures and associates continued Company Investments in subsidiaries \u00a3m Cost At 1 January 2021 424.9 Additions 1.1 At 31 December 2021 426.0 At 1 January 2022 426.0 Additions 1.1 At 31 December 2022 427.1 Amounts written off At 1 January 2021 (273.7) At 31 December 2021 (273.7) At 1 January 2022 (273.7) At 31 December 2022 (273.7) Net book value At 31 December 2022 153.4 At 31 December 2021 152.3 At 1 January 2021 151.2 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 (\u00a31.1m (2021: \u00a31.1m)). Details of the subsidiaries in which the Company has an interest are set out in note 24. 15 Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities related to contracts with customers, in addition to amounts
included in trade receivables:
2022 2021
\u00a3m \u00a3m
Contract assets
50.8
39.9
Non-current assets recognised relating to customer retentions
3.4
5.5
Contract liabilities
(1.4)
(10.7)
Contract assets is made up of a portfolio of contracts and represents unbilled amounts and includes amounts arising from changes to the scope of works that have been recognised as revenue but not yet billed to the customer. In the prior year, the reversal of revenue (as included in note 3) resulted in a decrease in contract assets of \u00a343.4m. There are no other significant one-off factors outside of normal trading contributing to the increase in contract assets. Contract liabilities result when cumulative cash received exceeds cumulative revenue on any particular contract. On contracts undertaken by the Group, this typically results from work being undertaken, or on framework contracts awarded, in a different order to the programme envisaged in the contractual payments schedule. There are no significant one-off factors outside of normal trading contributing to the decrease in contract liabilities. Revenue recognised in 2022 from performance obligations satisfied in previous periods was immaterial. Notes to the Financial Statements continued
The aggregate amount of costs incurred plus recognised profits, less recognised losses, for all contracts in progress
at the statement of financial position date was \u00a33,501.3m (2021: \u00a34,041.3m). Progress billings and advances received
from customers under open construction contracts amounted to \u00a33,485.3m (2021: \u00a34,057.8m). Advances for which
work has not started, and billings in excess of costs incurred and recognised profits are included in credit balances
on long-term contracts.
Unsatisfied long-term contracts
The following table shows unsatisfied performance obligations resulting from long-term contracts:
2022 2021
\u00a3m \u00a3m
Aggregate amount of the transaction price allocated to long-term
contracts that are partially or fully unsatisfied as at 31 December
1,812.6
2,633.5
Management expects that approximately 48% of the transaction price allocated to the unsatisfied contracts as of 31
December 2022 will be recognised as revenue during the next reporting period (\u00a3875.8m). Of the remaining 52%, 38%
will be recognised during 2024 to 2026.
Mobilisation costs and costs incurred to obtain a contract
The Group does not have any assets relating to mobilisation costs or costs incurred to obtain a contract.
16 Trade and other receivables
Group Company
2022 2021
\u00a3m \u00a3m
Amounts included in current assets
Trade receivables
98.3
120.0
Other receivables
6.8
4.5
Contract assets
50.8
39.9
Prepayments and accrued income
31.3
34.5
Amounts owed by joint ventures and associates
0.2
0.7
Amounts owed by subsidiary undertakings
\u2013
\u2013
187.4
199.6
Amounts included in non-current assets
Other receivables
3.5
5.5
2022
\u00a3m
2021
\u00a3m
At 31 December 2022, contract assets falling due within one year include retentions of \u00a33.1m (2021: \u00a31.8m) relating to
long-term contracts in progress. Other receivables falling due after more than one year include retentions of \u00a33.4m
(2021: \u00a35.5m) relating to long-term contracts in progress.
The average credit period within trade receivables on amounts billed for construction work and on sales of goods is
32 days (2021: 31 days). The analysis of the due dates of the trade receivables was \u00a391.3m (2021: \u00a3115.8m) due within
30 days, \u00a33.3m (2021: \u00a31.7m) due between 30 and 60 days and \u00a33.7m (2021: \u00a32.5m) due after 60 days. An analysis of
trade receivables that are beyond their due dates is shown in note 18.
In respect of the Company, amounts due from subsidiary undertakings are repayable on demand and may be
interest-bearing.
17 Cash, loans and borrowings Cash and cash equivalents Cash and cash equivalents are analysed below, and include the Group\u2019s share of cash held by joint operations of \u00a356.5 m (2021: \u00a358.1m).
Group Company
2022 2021
\u00a3m \u00a3m
Cash and cash equivalents
123.8
159.4
Cash and cash equivalents in
the cash flow statement
123.8
159.4
2022 \u00a3m 2021 \u00a3m
Interest-bearing loans and borrowings
Group Company
2022 2021
\u00a3m \u00a3m
Current
Term Loan
\u2013
7.4
\u2013
7.4
Non-current
Term Loan
\u2013
32.0
\u2013
32.0
2022 \u00a3m 2021 \u00a3m The Group repaid the Term Loan during the year (2021: the Term Loan was stated after associated arrangement fees of \u00a30.6m, classified within one year, which were being amortised over the period of the facility). The Group\u2019s borrowings facilities are described in note 18. Cash flow information Net cash/(debt) reconciliation This section sets out an analysis of net cash/(debt) and movements in net cash/(debt) during the year.
Group Company
2022 2021
\u00a3m \u00a3m
Cash and cash equivalents
123.8
159.4
Borrowings \u2013 current
\u2013
(7.4)
Borrowings \u2013 non-current
\u2013
(32.0)
Net cash before lease liabilities
123.8
120.0
Lease liabilities (note 13)
(24.1)
(26.8)
Net cash
99.7
93.2
2022 \u00a3m 2021 \u00a3m Notes to the Financial Statements continued
Cash and cash Borrowings \u2013 Borrowings \u2013 Lease
equivalents current non-current liabilities Total
Group \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Net cash/(debt) at 1 January 2021
150.9
( 7. 2)
(39.6)
(33.3)
70.8
Cash flows
8.5
(0.2)
7.6
10.8
26.7
New leases
\u2013
\u2013
\u2013
(18.0)
(18.0)
Disposal of leases
\u2013
\u2013
\u2013
13.7
13.7
Interest expense
\u2013
\u2013
\u2013
(0.9)
(0.9)
Interest payments (presented as operating
cash flows)
\u2013
\u2013
\u2013
0.9
0.9
Net cash/(debt) at 31 December 2021
159.4
(7.4)
(32.0)
(26.8)
93.2
Net cash/(debt) at 1 January 2022
159.4
(7.4)
(32.0)
(26.8)
93.2
Cash flows
(35.6)
7.4
32.0
8.4
12.2
New leases
\u2013
\u2013
\u2013
(16.8)
(16.8)
Disposal of leases
\u2013
\u2013
\u2013
11.1
11.1
Interest expense
\u2013
\u2013
\u2013
(1.2)
(1.2)
Interest payments (presented as operating
cash flows)
\u2013
\u2013
\u2013
1.2
1.2
Net cash/(debt) at 31 December 2022
123.8
\u2013
\u2013
(2 4.1)
99.7
Company Cash and cash equivalents \u00a3m Borrowings \u2013 current \u00a3m Borrowings \u2013 non-current \u00a3m Total \u00a3m Net cash/(debt) at 1 January 2021 20.1 ( 7. 2) (39.6) (26.7) Cash flows 54.9 (0.8) 7. 6 61.7 Arrangement fees \u2013 0.6 \u2013 0.6 Net cash/(debt) at 31 December 2021 75.0 (7.4) (32.0) 35.6 Net cash/(debt) at 1 January 2022 75.0 (7.4) (32.0) 35.6 Cash flows (74.9) 7.4 32.0 (35.5) Net cash at 31 December 2022 0.1 \u2013 \u2013 0.1 18 Financial instruments \u2013 Fair values and risk management Risk management The Group\u2019s centralised treasury function manages financial risk, principally arising from liquidity and funding risks and movements in foreign currency rates and interest rates, for all companies within the Group in accordance with policies agreed by the directors. Neither the Company nor the Group enters into speculative transactions. a) Capital management The objective of the Group\u2019s strategy is to deliver long-term sustainable value to shareholders while maintaining a balanced approach to investment in the business for growth, maintaining a strong balance sheet and returns to shareholders. Costain is targeting a dividend cover of around three times adjusted earnings, taking into account the free cash flow generated in the period. The Group recognises the importance of dividends to shareholders and remains committed to returning to dividend payments when appropriate. The Board has concluded that the priorities, and best returns, for the Company\u2019s capital, over the next financial year, are to invest in organic opportunities and to build further the Company\u2019s capital base and therefore does not recommend a final dividend this year . 18 Financial instruments \u2013 Fair values and risk management continued Risk management continued b) Liquidity and funding risk Ultimate responsibility for liquidity and funding risk rests with the Board, which has put in place a monitoring and reporting framework to manage funding requirements. Liquidity risk is managed by monitoring actual and forecast short and medium-term cash flows and the maturity profile of financial assets and liabilities and by maintaining adequate cash reserves and bank facilities. The nature and timing of the contract cash flows causes the cash balances to vary over the month with the balance usually highest at month-end. The average month-end net cash balance during the year was \u00a3101.9m (2021: \u00a3106.7m). Customers awarding long-term contracting work may, as a condition of the award, require the contractor to provide performance and other bonds. Consequently, the Group is reliant on its ability to source bank and surety bonds. It has facilities in place to provide these bonds and monitors the usage and regularly updates the forecast usage of these facilities. At 31 December 2022, the Group had banking and bonding facilities, including a \u00a3125.0m Revolving Credit Facility, extending to 24 September 2024 (2021: \u00a3131.0m, extending to September 2023). At 31 December 2021, the Group also had a \u00a340.0m Term Loan, which was repaid during 2022. The unsecured facilities have financial covenants based on interest cover, leverage and liquidity measured quarterly. The covenants are based on accounting standards already in force at the date of signing the facilities and any subsequent agreements. The Group complied with all covenants in
2022. The unsecured bonding facilities are set out below:
Group and Company
2022 2021
\u00a3m \u00a3m
Expiring between one and five years
280.0
310.0
Element of above facilities available for borrowings
\u2013
2.5
At 31 December 2022, the utilisation of these bonding facilities amounted to \u00a388.8m (2021: \u00a3100.7m). c) Credit risk The Group focuses on major blue-chip private sector and large public sector customers. In respect of contracts with other customers, the Group uses an external credit scoring system to assess a potential customer\u2019s credit quality and considers the timing and amounts of progress payments and will enter into a contract only if these assessments are satisfactory. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared cred risk characteristics and the days past due. Group 1 comprises major blue-chip private sector and large public sector customers. Group 2 includes smaller customers and receivables arising from various additional services undertaken as requirements of some of the maintenance contracts. Revenue of \u00a31,412.1m (2021: \u00a31,123.0m) was attributable to Group customers and \u00a39.3m (2021: \u00a312.2m) attributable to Group 2 customers. The contract assets relate to unbilled work in progress and have substantially the same credit risk characteristics as the trade receivables for the same types of contracts. The Group has concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. The expected loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors that might affect the ability of the customers to settle the receivables. Notes to the Financial Statements continued
On this basis, the loss allowance as at 31 December 2022 and 31 December 2021 was determined as follows for both
trade receivables and contract assets:
Less than 60 to 120 days More than 120 days
Current 60 days past due past due
past due
Total
31 December 2022
Group 1
Expected loss rate
0.00%
0.10%
0.25%
0.50%
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade receivables
94.3
2 .1
0.7
0.2
97.3
Contract assets
34.0
15.2
1.3
0.2
50.8
Loss allowance
\u2013
\u2013
\u2013
\u2013
\u2013
Group 2
Expected loss rate
1.0%
2.0%
15.0%
30.0%
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade receivables
0.7
0.2
\u2013
0.1
1.0
Contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
Loss allowance
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2021
Group 1
Expected loss rate
0.00%
0.10%
0.25%
0.50%
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade receivables
114.6
2.8
1.0
1.1
119.5
Contract assets
19.2
8.2
4.2
8.3
39.9
Loss allowance
\u2013
\u2013
\u2013
\u2013
\u2013
Group 2
Expected loss rate
1.0%
2.0%
15.0%
30.0%
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade receivables
0.4
0.1
\u2013
\u2013
0.5
Contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
Loss allowance
\u2013
\u2013
\u2013
\u2013
\u2013
Impairment losses on trade receivables and contract assets are included within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item. The total provision for impairment of trade and other receivables is \u00a30.3m (2021: \u00a30.3m). The credit risk in contract assets is not material. Deposits in the UK are placed with the bank facility providers or, in joint operations, with banks agreed by the partners, provided that bank has a long-term credit rating above BBB-. Transactions involving derivative financial instruments are with bank or insurance company counterparties with high credit ratings that are monitored regularly and with whom there are signed netting agreements. Given the high credit ratings of the banks and insurance companies used, management does not expect any counterparty will fail to meet its obligations. At the year-end date, excluding UK Government bodies, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amounts of each financial asset, including derivative financial instruments, and the individual constituents of contract assets in the statement of financial position.
18 Financial instruments \u2013 Fair values and risk management continued
Risk management continued
d) Interest rate risk
The Group has cash balances and bank facilities in the UK, mostly denominated in pounds sterling.
The Group previously had interest rate swap arrangements that fixed the effective LIBOR interest rate on \u00a350.0m of
pounds sterling borrowings up to June 2021.
The Group repaid the Term Loan during the year and therefore, at the year-end, interest rate risk is negligible.
e) Foreign currency risk
Transactional currency exposures arise from sales or purchases by operating companies in currencies other than their
functional currency. The current strategy is to hedge both committed and forecast foreign currency exposures, where
applicable, and where the transaction timing and amount can be determined reliably and no natural hedge exists.
The Group only enters into forward contracts when a contractual commitment exists in respect of the foreign currency
transaction and the Group\u2019s policy is to negotiate the terms of the hedge derivative to match the terms of the hedged
item to maximise hedge effectiveness. The Group\u2019s treasury function evaluates and hedges foreign currency risks,
in close cooperation with the responsible operational management team.
Cash flow hedges
Forward currency contracts that hedge forecast transactions are classified as cash flow hedges and stated at fair value
based on a Level 2 valuation method, using quoted forward exchange rates. The terms of the foreign currency contracts
match the terms of the commitments.
Interest rate swaps are classified as cash flow hedges and stated at fair value based on a Level 2 valuation method using
yield curves derived from prevailing market interest rates.
At 31 December 2022, the Group had less than \u00a30.1m of cash flow hedges (2021: as summarised below). The carrying
value represents the fair value of the contract; the contractual cash flows represent the pounds sterling commitments.
2022
2021
Between Between
Carrying Contractual Within one one and Carrying Contractual Within one one and
amount cash flows year five years amount cash flows year five years
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign exchange contracts:
Purchases
\u2013
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
\u2013
Sales
\u2013
\u2013
\u2013
\u2013
\u2013
1.0
1.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.8
0.8
\u2013
Interest rate swaps
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.8
0.8
\u2013
The carrying amount of hedge instruments is included in trade and other receivables or trade and other payables. The
expected impact on the income statement of the foreign exchange contracts is \u00a3nil in 2023.
Notes to the Financial Statements continued
The movements on the hedging reserve by classification are set out below.
Interest Total hedge
rate swaps reserves
\u00a3m \u00a3m
At 1 January 2021
(0.3)
(0.3)
Change in fair value of hedging instrument recognised in OCI for the year
\u2013
\u2013
Reclassified from OCI to profit or loss
0.3
0.3
At 31 December 2021
\u2013
\u2013
At 1 January 2022
\u2013
\u2013
At 31 December 2022
\u2013
\u2013
The Company does not have any forward foreign currency contracts or other derivatives.
Financial assets and liabilities
The Group has grouped its financial instruments into \u2018classes\u2019. Although IFRS 7 does not define \u2018classes\u2019, as a minimum
instruments measured at amortised cost should be distinguished from instruments measured at fair value.
a) Currency and maturity of financial assets
Financial assets not measured at fair value
2022
2021
Between Between
Within one and After five Within one and After five
Total one year five years years Total one year five years years
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cash and cash equivalents:
pounds sterling
123.2
123.2
\u2013
\u2013
158.8
158.8
\u2013
\u2013
other
0.6
0.6
\u2013
\u2013
0.6
0.6
\u2013
\u2013
123.8
123.8
\u2013
\u2013
159.4
159.4
\u2013
\u2013
Trade, other receivables and amounts
owed by joint ventures and associates:
pounds sterling
108.8
105.3
3.5
\u2013
130.7
125.2
5.5
\u2013
Insurance recovery asset:
pounds sterling
13.4
9.4
4.0
\u2013
\u2013
\u2013
\u2013
\u2013
122.2
114.7
7.5
\u2013
130.7
125.2
5.5
\u2013
Total financial assets
not measured at fair value
246.0
238.5
7.5
\u2013
290.1
284.6
5.5
\u2013
The Group has not disclosed the fair values for short-term trade receivables and amounts due from joint ventures and
associates within financial assets, because their carrying amounts are a reasonable approximation of fair values.
Financial assets measured at fair value
The Group measures its currency forwards and interest rate swaps at fair value (see above) but does not have any other
financial assets measured at fair value.
18 Financial instruments \u2013 Fair values and risk management continued
Financial assets and liabilities continued
b) Currency and maturity of financial liabilities
Financial liabilities not measured at fair value
2022
2021
Between Between
Within one and Within one and
Total one year five years Total one year five years
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term Loan \u2013 pounds sterling
\u2013
\u2013
\u2013
39.4
7.4
32.0
Lease liabilities \u2013 pounds sterling
24 .1
9.1
15.0
26.8
8.6
18.2
Trade and other payables \u2013 pounds sterling
140.6
139.5
1.1
116.0
114.2
1.8
Total financial liabilities not measured at fair value
164.7
148.6
16.1
182.2
130.2
52.0
The Group has not disclosed the fair values for short-term trade and other payables and bank loans within financial
liabilities, because their carrying amounts are a reasonable approximation of fair values.
Lease liabilities are carried at the present value of the minimum lease payments. The expected undiscounted lease
payments on long-term and high value leased assets included in the IFRS 16 discounted liability are within one year
\u00a312.4m (2021: \u00a39.2m), two to five years \u00a324.6m (2021: \u00a316.3m) and over five years \u00a33.2m (2021: \u00a33.8m).
There are no financial liabilities carried at fair value.
The Company has issued financial guarantees relating to performance of contracts signed by its subsidiaries, which could
be called upon on demand if the subsidiary fails to perform under the contract. However, the value of these guarantees
is difficult to quantify, and they have never been called. The 2021 Annual Report and Accounts incorrectly reported that a
guarantee in relation to the Peterborough & Huntingdon contract had been utilised.
c) Reconciliation of trade and other receivables and trade and other payables to the statement of financial position
2022
2021
Current Non-current Current Non-current
\u00a3m \u00a3m \u00a3m \u00a3m
Trade and other receivables (as above)
114.7
7.5
125.2
5.5
Contract assets
50.8
\u2013
39.9
\u2013
Prepayments and accrued income
31.3
\u2013
34.5
\u2013
196.8
7.5
199.6
5.5
2022
2021
Current Non-current Current Non-current
\u00a3m \u00a3m \u00a3m \u00a3m
Trade and other payables (as above)
139.5
1.1
114.2
1.8
Contract liabilities
1.4
\u2013
10.7
\u2013
Accruals and deferred income
91.6
\u2013
90.2
\u2013
232.5
1.1
215.1
1.8
d) Effective interest rates of financial assets and liabilities
2022
2021
Financial assets
Cash and cash equivalents
0.0% to 3.4%
0.0% to 0.3%
Financial liabilities
The Group repaid the Term Loan during the year (2021: \u00a339.4m (net of fees) was outstanding at the year-end). The Group also
has a \u00a3125.0m (2021: \u00a3131.0) Revolving Credit Facility (RCF) of which \u00a3nil (2021: \u00a3nil) was drawn at the year-end. These loans are
unsecured and carry interest at floating rates at a margin over SONIA (2021: over LIBOR).
Notes to the Financial Statements continued
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 \u00a311.9m, comprising \u00a313.2 m included in operating costs less \u00a31.3m interest income included in net finance expense (2021: \u00a311.7m, comprising \u00a311.7m in operating costs and \u00a3nil interest income included in net finance expense). Defined benefit scheme The defined benefit scheme was closed to new members on 31 May 2005 and from 1 April 2006, future benefits were calculated on a Career Average Revalued Earnings basis. The scheme was closed to future accrual of benefits to members on 30 September 2009. A full actuarial valuation of the scheme was carried out as at 31 March 2022 and this was updated to 31 December 2022 by a qualified independent actuary. At 31 December 2022, there were 2,867 retirees and 2,529 deferred members (2021: 2,875 retirees and 2,629 deferred members). The weighted average duration of the obligations is 11.9 years (2021: 16.3 years).
2022 2021 2020
\u00a3m \u00a3m \u00a3m
Present value of defined benefit obligations
(527.1)
(837.5)
(886.5)
Fair value of scheme assets
587.3
904.6
880.9
Recognised asset/(liability) for defined benefit obligations
60.2
67.1
(5.6)
Movements in present value of defined benefit obligations
2022 2021
\u00a3m \u00a3m
At 1 January
837.5
886.5
Interest cost
14.8
11.7
Remeasurements \u2013 demographic assumptions
(0.3)
(5.4)
Remeasurements \u2013 financial assumptions
(321.4)
(16.1)
Remeasurements \u2013 experience adjustments
29.7
(6.5)
Benefits paid
(33.2)
(32.7)
At 31 December
527.1
837. 5
Movements in fair value of scheme assets
2022 2021
\u00a3m \u00a3m
At 1 January
904.6
880.9
Interest income
16.1
11.7
Remeasurements \u2013 return on assets
(310.7)
34.6
Contributions by employer
10.8
10.4
Administrative expenses
(0.3)
(0.3)
Benefits paid
(33.2)
(32.7)
At 31 December
587.3
904.6
Notes to the Financial Statements continued
Expense recognised in the income statement
2022 2021
\u00a3m \u00a3m
Administrative expenses paid by the pension scheme
(0.3)
(0.3)
Administrative expenses paid directly by the Group
(1.2)
(1.0)
Interest income on the net assets of the defined benefit pension scheme
1.3
\u2013
(0.2)
(1.3
2022 2021
Fair value of scheme assets \u00a3m \u00a3m
Global equities
109.8
137. 2
Multi-asset growth funds
56.1
133.7
Multi-credit fund
110.9
118.1
LDI plus collateral
307.2
494.6
Property
\u2013
4.4
Cash
3.3
16.6
587.3
904.6
All equities are quoted securities. The multi-asset growth funds comprise portfolios of quoted and unquoted
investments. The multi-credit fund invests in a portfolio of primarily floating rate debt of non-investment grade or
unrated borrowers. The Liability Driven Investments (LDI) portfolio comprises gilts, repos and swaps and is supported by
a liquid absolute return fund providing collateral.
Quoted equities are valued at the prevailing bid, offer or middle market stock exchange or over-the-counter market
prices. In the multi-asset growth funds, the fair values of the underlying unquoted assets are determined by the fund
managers using quoted prices for similar assets or other valuation techniques where all the inputs are directly observable
or indirectly observable from market data. The loans in the multi-credit fund may be priced either using quotes from a
pricing vendor (if available), a broker or at a level determined by the investment manager that is agreed with the fund.
The LDI fund is valued using a unit price calculated for the fund based on the net asset value of the underlying assets.
The property investment was held within a limited partnership and was valued by the general partner in accordance
with RICS valuation standards.
The pension scheme does not have any assets invested in the Group\u2019s financial instruments or in property or other assets
used by the Group.
21 Employee benefits continued Pensions continued
Principal actuarial assumptions (expressed as weighted averages)
2022 2021 2020
% % %
Discount rate
5.00
1.80
1.35
Future pension increases
2.90
3.25
2.85
Inflation assumption
3.10
3.40
2.95
Weighted average life expectancies from age 65, as per mortality tables, used to determine benefits at 31 December
2022 and 31 December 2021 are:
2022
2021
Male Female Male Female
(years) (years) (years) (years)
Currently aged 65
21.9
23.9
22.1
24.0
Non-retirees currently aged 45
22.9
25.1
23.1
25.3
The discount rate, inflation and pension increase and mortality assumptions have a significant effect on the amounts reported. Changes in these assumptions would have the following effects on the defined benefit scheme:
Pension liability Pension cost
\u00a3m \u00a3m
Increasing the discount rate by 0.25%, decreases pension liability and increases pension
income/reduces pension cost by
Decreasing inflation by 0.25% (which decreases pension increases), decreases pension
15.4
0.8
liability and increases pension income/reduces pension cost by
Increasing life expectancy by one year, increases pension liability and reduces pension
13.5
0.7
income/increases pension cost by
17.9
0.9
As highlighted in the table above, the defined benefit scheme exposes the Group to actuarial risks such as longevity, interest rate, inflation and investment risks. The LDI portfolio is designed to respond to changes in gilt yields in a similar way to a fixed proportion of the liabilities. With the LDI portfolio, if gilt yields fall, the value of the investments will rise to help partially match the increase in the trustee valuation of the liabilities arising from a fall in the gilt yield based discount rate. Similarly, if gilt yields rise, the value of the matching asset portfolio will fall, as will the valuation of the liabilities because of an increase in the discount rate. The leverage within the LDI portfolio means the equivalent of 95% of the value of the assets is sensitive to changes in interest rates and inflation and this mitigates the equivalent movement in the liabilities of the scheme as a whole. In 2022, long-term government bond yields increased significantly which meant that the value of the LDI portfolio fell but the value of the liabilities also fell by a similar amount. In accordance with the pension regulations, a triennial actuarial review of the Costain defined benefit pension scheme as at 31 March 2022 was started in 2022. Discussions around the results of the review are currently in progress and the Trustee/Company have until 30 June 2023 to complete the review. The last triennial actuarial review was completed in March 2020 and the valuation and updated deficit recovery plan were agreed with the Scheme Trustee resulting in cash contributions of \u00a310.2m for each year commencing 1 April 2020 (increasing annually with inflation) until the deficit is cleared, which would be in 2029 on the basis of the assumptions made in the 2019 valuation and agreed recovery plan. In addition, as previously implemented, the Group will continue to make an additional contribution so that the total deficit contributions match the total dividend amount paid by the Company each year. Any additional payments in this regard would have the effect of reducing the recovery period in the agreed plan. The Group will also pay the expenses Notes to the Financial Statements continued
Any surplus of deficit contributions to the Costain Pension Scheme would be recoverable by way of a refund, as the
Group has the unconditional right to any surplus once all the obligations of the Scheme have been settled. Accordingly,
the Group does not expect to have to make provision for these additional contributions arising from this agreement in
future accounts.
Defined contribution schemes
Two defined contribution pensions schemes are operated. The total expense relating to these plans was \u00a311.7m
(2021: \u00a310.4m).
Share-based payments
The Company operates a number of share-based payment plans as described below.
Long-Term Incentive Plans (LTIP)
Shareholders approved a Long-Term Incentive Plan at the 2014 AGM that allows for conditional awards with a maximum
face value of up to 100% of base salary to be awarded. Performance conditions, such as those based on earnings per
share, are determined by the Remuneration Committee of the Board at the time of grant.
Annual Incentive Plan (AIP)
Executive directors and other senior management are eligible to participate in the Company\u2019s Annual Incentive
Plan, under which one third of the award is payable in shares. The total AIP award of up to 150% of base salary has
performance conditions based on adjusted EBIT (earnings before interest, tax and other items) (at least 50% of the
award) and other measures. The share award element vests on the second anniversary of the date of grant and will be
satisfied by shares purchased by a trust on behalf of the Group. It will not lead to any dilution of shareholder interest.
Participants must be in employment with the Company and not under notice of termination (either given or received)
on the date of vesting.
Deferred Share Bonus Plan (DSBP)
Prior to 2014, executive directors and other senior management were eligible to participate in the Company\u2019s Deferred
Share Bonus Plan which allowed for conditional awards with a face value of up to 50% of base salary with a performance
condition based on adjusted EBIT (earnings before interest, tax and other items). The deferred bonus award was satisfied
by shares purchased by a trust on behalf of the Group, so did not dilute shareholder interests. The last grant under the
DSBP was made in 2014 and vested on 31 March 2016 and the last transactions completed in 2020.
Save As You Earn Scheme (SAYE)
The Company operates a SAYE scheme that is open to all eligible employees who pay a fixed amount from salary into
a savings account each month and elect to save over three years. At the end of the savings period, employees have six
months in which to exercise their options using the funds saved (after which the options expire). If employees decide not
to exercise their options, they may withdraw the funds saved. Exercise of options is subject to continued employment
within the Group (except where permitted by the rules of the scheme).
Share-based payment expense
The amounts recognised in the income statement, before tax, for share-based payment transactions with employees was
\u00a31.1m (2021: \u00a31.1m); the entire charge relates to subsidiaries.
21 Employee benefits continued
Share-based payments continued
Options outstanding at the end of the year
The movements in the outstanding LTIPs (nil-cost option), AIP (nil-cost option) and DSBPs (nil-cost option), which
arrange for the grant of shares to executive directors and senior management, and the outstanding SAYE schemes
are shown below.
LTIP
DSBP
AIP
SAYE
Weighted average
Number Number Number Number exercise price
(m) (m) (m) (m) (p)
Outstanding at 1 January 2021
3.8
\u2013
0.4
2.1
229.5
Forfeited during the year
(1.0)
\u2013
\u2013
(0.8)
286.3
Exercised during the year
(0.2)
\u2013
(0.2)
\u2013
\u2013
Granted during the year
2.9
\u2013
\u2013
\u2013
\u2013
Outstanding at 31 December 2021
5.5
\u2013
0.2
1.3
191.9
Outstanding at 1 January 2022
5.5
\u2013
0.2
1.3
191.9
Forfeited during the year
(2.3)
\u2013
\u2013
(0.5)
278.7
Exercised during the year
\u2013
\u2013
(0.1)
\u2013
\u2013
Granted during the year
9.3
\u2013
2.2
\u2013
\u2013
Outstanding at 31 December 2022
12.5
\u2013
2.3
0.8
118.4
Exercisable at the end of
the period
0.1
\u2013
0.1
0.7
118.4
Share options outstanding at the end of the year had a weighted average remaining contractual life of 4.6 years
(2021: 4.2 years).
The fair value of options granted is calculated using the Black-Scholes option pricing model. The aggregate fair value of
options granted during the year was \u00a33.6m (2021: \u00a31.7m). The assumptions used in valuing the grants were:
2022
2021
Expected volatility
20%
20%
Expected life (years)
3.0
3.0
Risk-free interest rate
1.2%
1.2%
Expected dividend yield
0.0%
0.0%
The expected volatility is based on the historical share price volatility over a term matching the expected life. The
expected life is based on management\u2019s best estimate having regard to the effect of non-transferability, exercise
restrictions and behavioural considerations.
Notes to the Financial Statements continued
22 Share capital
2022
2021
Number Nominal value Number Nominal value
(millions) \u00a3m (millions) \u00a3m
Issued share capital
Shares in issue at beginning of year \u2013
ordinary shares of 50p each, fully paid
275.0
137.5
275.0
137. 5
Issued in year (see below)
0.1
\u2013
\u2013
Shares in issue at end of year \u2013
ordinary shares of 50p each, fully paid
275.1
137.5
275.0
137.5
The Company\u2019s issued share capital comprised 275,084,741 ordinary shares of 50 pence each as at 31 December 2022. All shares rank pari passu regarding entitlement to capital and dividends. In the year, no dividends were paid and, therefore, no shares were issued under the Scrip Dividend Scheme. No options were exercised under the SAYE schemes in the year as all options were \u2018underwater\u2019 so the Company issued nil shares in respect of SAYE. The 2019 LTIP vested in the year and 135,000 shares were issued in May 2022 to satisfy this vesting. The share options outstanding at the year-end are detailed in note 21. Details of the performance conditions and the options granted to executive directors are given in the Directors\u2019 Remuneration report. 23 Contingent liabilities Group Group bank borrowing facilities and bank and surety bonding facilities are supported by cross-guarantees given by the Company and participating companies in the Group. There are contingent liabilities in respect of: \u2022 performance bonds and other undertakings entered into in the ordinary course of business; and \u2022 legal claims arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from the contingent liabilities other than those provided. Company The Company has guaranteed the obligations of the subsidiary companies that are participating employers of The Costain Pension Scheme, the defined benefit pension scheme in the UK. At 31 December 2022, the asset was \u00a360.2m (2021: asset of \u00a367.1m) on an IAS 19 basis and is included in these financial statements as disclosed in note 21. 24 Subsidiary undertakings, joint ventures, associates and joint operations
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)
Costain Upstream Limited
Engineering and Design Services
100
(2)
Richard Costain Limited
Service Company
100
(1)
Percentage of Registered office/principal
Activity \u00a3m equity held
place of business
Reporting date
Principal joint ventures
ABC Electrification Ltd
Rail Electrification
19.6
33.3
(7)
31 March
4Delivery Limited
Civil Engineering
\u2013
40
(3)
31 March
Issued share capital Percentage of Registered office/principal The equity capital of the above are held by subsidiary undertakings with the exception of Richard Costain Ltd and Costain Engineering & Construction Limited. All undertakings operate mainly in the country of incorporation. See key to registered office/principal place of business at the bottom of this note. All holdings are of ordinary shares.
Percentage Country of
Activity interest business
Major joint operations
A-one+ Joint Venture \u2013 ASC area 12 \u2013 Highways England
Engineering and Maintenance
33.3
UK
CH2M-Costain Joint Venture \u2013 Area 14 M&R contract
Engineering and Maintenance
50
UK
Costain-Atkins-Black & Veatch Joint Venture \u2013 Thames Water AMP6
Engineering
70
UK
Costain-CH2M UK \u2013 ESCC JV \u2013 East Sussex highway maintenance
Engineering and Maintenance
50
UK
Costain-Galliford Try Joint Venture \u2013 M1 smart motorways
Civil Engineering
70
UK
Costain-MWH Joint Venture \u2013 Southern Water AMP6
Civil Engineering
50
UK
Costain-Skanska \u2013 HS2 Enabling works
Civil Engineering
50
UK
Costain-Skanska Joint Venture \u2013 A14 Cambridge to Huntingdon
Civil Engineering
50
UK
Improvement Scheme
Costain-Skanska Joint Venture \u2013 Balfour Beatty Joint Venture \u2013 A14
Civil Engineering
33.3
UK
CVB Joint Venture \u2013 Thames Tideway Tunnel East
Civil Engineering
40
UK
Skanska-Costain-Strabag S1 Joint Venture \u2013 HS2 Main Works
Rail Engineering
34
UK
Skanska-Costain-Strabag S2 Joint Venture \u2013 HS2 Main Works
Rail Engineering
34
UK
The ASP Batch Joint Venture \u2013 Severn Trent \u2013 Large capital schemes
Engineering
33.3
UK
outside AMP6
Notes to the Financial Statements continued In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, associates, joint ventures and joint arrangements is required: 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 (8) 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 Abu Dhabi Co WLL Dormant 49 (9) Costain Alcaidesa Limited Holding Company 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 (15) 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 (16) Costain Oil, Gas & Process (Overseas) Limited Dormant 100 (1) Costain Process Construction Limited Dormant 100 (1) JBCC Rhead PTE Limited Dormant 100 (12) 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) 24 Subsidiary undertakings, joint ventures, associates and joint operations continued
Registered
Percentage of office/principal
Status equity held place 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
(14)
China Harbour-Costain Mexico S de RL de CV
Dormant
50
(13)
Gravitas Offshore Limited
Dormant
45
(6)
Jalal Costain WLL
Dormant
49
(10)
Nesma-Costain Process Co. Limited
Dormant
50
(11)
Costain Abu Dhabi Co WLL has been treated as a subsidiary undertaking due to Costain having power to influence and control the composition of the Board of directors and the beneficial right to all the net income. Dormant status means no or a very small number of transactions with activity winding down.
Percentage Country of
Activity interest business
Other joint operations, including completed
ACTUS Joint Venture \u2013 Trawsfynydd nuclear power station Civil Engineering
25
UK
active waste retrieval
Alstom-Babcock-Costain Joint Venture \u2013 Edinburgh to Glasgow Rail Engineering
33.3
UK
Rail Improvement Programme
Alstom-Costain C644 Joint Venture \u2013 Traction power \u2013 Crossrail
Rail Engineering
32.5
UK
Alstom-Costain C650 Joint Venture \u2013 HV power supply \u2013 Crossrail
Rail Engineering
32.5
UK
Amec-Costain-Jacobs Joint Venture \u2013 Magnox ILW Civil Engineering
33.3
UK
Management Programme
A-one+ Integrated Highway Services \u2013 MAC 7
Engineering and Maintenance
33.3
UK
A-one+ Integrated Highway Services \u2013 MAC 10
Engineering and Maintenance
25
UK
A-one+ Integrated Highway Services \u2013 MAC 12
Engineering and Maintenance
33.3
UK
A-one+ Integrated Highway Services \u2013 MAC 14
Engineering and Maintenance
33.3
UK
A-one+ Joint Venture \u2013 ASC area 4 \u2013 Highways England
Engineering and Maintenance
33.3
UK
ATC Joint Venture \u2013 C610 \u2013 Crossrail
Rail Engineering
32.5
UK
ATC Joint Venture \u2013 C695 \u2013 Crossrail
Rail Engineering
32.5
UK
Balfour Beatty-BmJV-Carillion-Costain Joint Venture \u2013
Civil Engineering
29
UK
National Major Projects \u2013 Highways England
CosMott Joint Venture \u2013 Devonport Major Infrastructure
Consultancy
50
UK
Programme \u2013 Construction Delivery Partner
Costain Arup Joint Venture \u2013 Yorkshire Water
Consultancy
50
UK
Costain-Dalekovod Joint Venture \u2013 National Grid HV Overhead
Engineering
60
UK
Line System
Costain-Hochtief Joint Venture \u2013 Reading station
Civil Engineering
50
UK
Costain-Lafarge Joint Venture \u2013 East and South East Framework
Civil Engineering
50
UK
Costain-Lafarge Joint Venture \u2013 Midlands Framework
Civil Engineering
50
UK
Costain-Laing O'Rourke Joint Venture \u2013 Bond Street station
Civil Engineering
50
UK
Costain-Laing O\u2019Rourke Joint Venture \u2013 Farringdon station
Civil Engineering
50
UK
Notes to the Financial Statements continued
Percentage Country of
Activity interest business
Other joint operations, including completed continued
Costain-Skanska C336 Joint Venture \u2013 Paddington New Yard \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska C360 Joint Venture \u2013 Eleanor Street \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska C405 Joint Venture \u2013 Paddington \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska C411 Joint Venture \u2013 Bond Street \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska C412 Joint Venture \u2013 Bond Street \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska Joint Venture \u2013 A14 Ellington to Fen Ditton
Civil Engineering
50
UK
Costain-Skanska Joint Venture \u2013 Crossrail Civils Framework Enabling Works
Civil Engineering
50
UK
Costain-Skanska Joint Venture \u2013 NGT Tunnels, London
Civil Engineering
52.6
UK
Costain-Skanska Joint Venture \u2013 Paddington Station Bakerloo Line Link Project
Civil Engineering
50
UK
Costain-Taylor Woodrow Joint Venture \u2013 King's Cross re-development & Phase II
Civil Engineering
50
UK
Northern works
Costain-Vinci Construction Joint Venture \u2013 Shieldhall
Civil Engineering
50
UK
Costain-Vinci Joint Venture \u2013 M4 corridor around Newport
Civil Engineering
50
UK
Costain-VWS Joint Venture \u2013 Mersey Valley Processing Centre
Engineering
50
UK
(Shell Green) Extension Project Stage 2
Educo UK Joint Venture \u2013 Bradford Schools
Building
50
UK
Galliford-Costain-Atkins Joint Venture \u2013 United Utilities
Engineering
42.5
UK
Lagan-Ferrovial-Costain \u2013 A8
Civil Engineering
45
UK
The e5 Joint Alliance Severn Trent Framework
Engineering
25
UK
TSIF-ILW Joint Venture \u2013 Trawsfynydd nuclear power station decommissioning
Civil Engineering
33.3
UK
Key to registered office/principal place of business
(1) Costain House, Vanwall Business Park, Maidenhead, Berkshire, SL6 4UB, England
(2)
56 Carden Place, Aberdeen, AB10 1UP, 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) Whitehill House, Windmill Hill Business Park, Whitehill Way, Swindon, SN5 6PE, England
(7)
8th Floor, The Place, High Holborn, London, WC1V 7AA, England
(8)
P.O.Box N-7768, Bank Lane, Nassau, Bahamas
(9) Dormant company \u2013 Abu Dhabi, UAE, no record of address
(10) Flat 33, Building 232, Road 18, Block 321, Manama, Bahrain
(11)
P.O.Box
6967
21
452, Jeddah, Saudi Arabia
(12)
Peninsula Plaza #27\u201301, 111 North Bridge Road, 179098, Singapore
(13)
Calle Delfines No. 268 \u2013 2, Frac. Playa Ensenada, Ensenada, B.C., CP. 22880, Mexico
(14) Marsza\u0142kowska 82, Warsaw, Mazowieckie, 00\u2013517, Poland
(15) Dormant company \u2013 Venezuela, no record of address
(16) Dormant company \u2013 Nigeria, no record of address
12 Intangible assets continued
The value in use calculations use the Group\u2019s four-year cash flow forecasts, which are based on the expected revenues
and profitability of each CGU, taking into account the current level of secured and anticipated orders, extrapolated for
future years by the expected growth applicable to each CGU, as follows:
2022 2022 2021 2021
Transportation Natural Resources Transportation Natural Resources
Growth rates % % % %
Year 5
1.5
1.5
1.9
1.9
Long-term average
1.5
1.5
1.9
1.9
At 31 December 2022, based on the internal value in use calculations, management concluded that the recoverable
value of the Transportation cash generating unit exceeded its carrying amount with substantial headroom.
At 31 December 2022, based on the internal value in use calculations, which included a sensitivity aligned to a 30%
reduction in absolute business unit operating profit, management concluded that the recoverable amount of the Natural
Resources cash generating unit exceeded its carrying amount, with headroom of \u00a332.1m. The recoverable amount of
the Natural Resources goodwill therefore continues to be subject to further sensitivities and changes in the value in use
assessment assumptions would have resulted in the following changes:
\u2022 An increase in the discount rate of 1.0% (from 15.5% to 16.5% pre-tax), reduces headroom by \u00a37.9m;
\u2022 A decrease in the long-term growth rate of 1.0% (from 1.5% to 0.5%), reduces headroom by \u00a35.8m; and
\u2022 A further reduction in CGU operating profit by an additional 20%, on top of the 30% reduction already modelled,
reduces headroom by \u00a319.3m.
Based on the above sensitivities the directors consider that there is no reasonable possible change in any key
assumption that, in isolation, would result in an impairment of goodwill. However, if the sensitivities modelled above
were to occur in combination, this would give rise to an impairment.
Notes to the Financial Statements continued
The Company\u2019s financial assets comprised cash at bank of \u00a30.1m (2021: \u00a375.0m) denominated in pounds sterling,
either on demand or with a maturity of up to three months, and trade and other receivables of \u00a369.4m (2021: \u00a371.9m)
denominated in pounds sterling and maturing within one year.
The Company\u2019s financial liabilities comprise trade and other payables of \u00a326.5m denominated in pounds sterling
(2021: \u00a326.4m and the \u00a339.4m (net of fees) Term Loan denominated in pounds sterling). All liabilities mature within
one year (2021: the Term Loan matured between one and five years).
Measurement of fair value
Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 2 fair values, as well as the significant
unobservable inputs used. There are no financial instruments whose fair value could be determined under Level 1 or 3.
Financial instruments measured at fair value
Inter relationship between
Significant significant unobservable inputs
Type
Valuation technique
unobservable inputs and fair value measurement
Cash flow hedges
Market comparison technique: The fair values are based
Not applicable.
Not applicable.
on broker quotes. Similar contracts are traded in an
active market and quotes reflect the actual transactions
in similar instruments. Interest rate swaps are measured
by discounting the related cash flows using yield curves
derived from prevailing market interest rates.
Financial instruments not measured at fair value
Type
Valuation technique
Significant unobservable inputs
Other financial liabilities (as above)
Discounted cash flow.
Not applicable.
Term Loan
Discounted cash flow.
Not applicable.
19 Trade and other payables
Group Company
2022 2021
\u00a3m \u00a3m
Current liabilities
Trade payables
97.5
83.0
Other payables
33.4
23.2
Social security
7.9
7. 6
Contract liabilities
1.4
10.7
Accruals and deferred income
91.6
90.2
Amounts owed to joint ventures and associates
0.7
0.4
Amounts owed to subsidiary undertakings
\u2013
\u2013
232.5
215.1
Non-current liabilities
Other payables
1.1
1.8
1.1
1.8
2022
\u00a3m
2021
\u00a3m
Accruals and deferred income include subcontract liabilities (not yet payable), subcontract retentions and other accruals
and deferred income.
The amounts included in contract liabilities and in deferred income at 31 December 2021 have all been recognised in the
income statement in the year.
19 Trade and other payables continued Other payables primarily includes the VAT liability. The directors consider that the carrying amount of trade payables, other payables, social security and amounts owed to joint ventures and associates approximates to their fair value. Financial risk management policies are in place that seek to ensure that all payables are paid within their credit timeframes. 20 Provisions for other liabilities and charges
Rectification Onerous
provision contract Other Total
Group \u00a3m \u00a3m \u00a3m \u00a3m
Current
At 1 January 2021
\u2013
\u2013
0.6
0.6
Provided
6.2
43.4
0.5
50.1
Utilised
\u2013
\u2013
(0.4)
(0.4)
At 31 December 2021
6.2
43.4
0.7
50.3
At 1 January 2022
6.2
43.4
0.7
50.3
Provided
7.1
\u2013
0.6
7.7
Utilised
(4.8)
(43.4)
(0.4)
(48.6)
At 31 December 2022
8.5
\u2013
0.9
9.4
Non-current
At 1 January 2021
\u2013
\u2013
\u2013
\u2013
At 31 December 2021
\u2013
\u2013
\u2013
\u2013
At 1 January 2022
\u2013
\u2013
\u2013
\u2013
Provided
3.7
\u2013
\u2013
3.7
At 31 December 2022
3.7
\u2013
\u2013
3.7
Company Expected credit loss provision \u00a3m Funding obligations \u00a3m Total \u00a3m Current At 1 January 2021 \u2013 0.1 0.1 Provided 40.0 \u2013 40.0 Utilised \u2013 (0.1) (0.1) At 31 December 2021 40.0 \u2013 40.0 At 1 January 2022 40.0 \u2013 40.0 Reclassified from non-current \u2013 0.1 0.1 Reclassified to amounts owed by subsidiary undertakings (40.0) \u2013 (40.0) At 31 December 2022 \u2013 0.1 0.1 Non-current At 1 January 2021 \u2013 0.7 0.7 At 31 December 2021 \u2013 0.7 0.7 At 1 January 2022 \u2013 0.7 0.7 Provided \u2013 0.1 0.1 Reclassified to current \u2013 (0.1) (0.1) At 31 December 2022 \u2013 0.7 0.7 Notes to the Financial Statements continued Group Rectification provision: Contract in the water sector In 2021, Costain recognised a provision of \u00a36.2m in respect of the estimated future costs of expected rectification works required at a customer\u2019s water treatment facility where the Group had been prime contractor. During 2022, working with designers, insurers and the customer, there is now greater clarity as to the scope and cost of rectification work required, albeit a final solution has yet to be formally agreed with all relevant parties. As at 31 December 2022, the Group\u2019s best estimate of the cost of the single most likely rectification solution is \u00a317.0m, of which costs of \u00a34.8m have been incurred. Accordingly a provision of \u00a312.2m has been included in the statement of financial position and disclosed in the table above. The work is expected to be concluded in 2024. Costain has engaged with its insurers and received confirmation that insurance cover is available and that all reasonable costs of rectification work that are validly incurred will be met by insurers. Consistent with this, insurers made an interim payment on account during 2022. Accordingly, an insurance receivable of \u00a313.4m has been recognised in the statement of financial position in accordance with IAS 37 on the basis that recovery is considered virtually certain. There is a cap on insurance but the cap is significantly in excess of the cost estimate. As at 31 December 2021, discussions with insurers were at an early stage and the expected recovery from insurers was not recognised as a receivable on the basis that it could not be considered virtually certain. Whilst the cost provision is management\u2019s best estimate, the final solution is yet to be agreed and cost estimates finalised. It is therefore reasonably foreseeable that adjustments to the amounts recognised as a provision may be required. However, given the relationship between the insurance policy and the liability, management does not consider that any increase in the cost of the rectification works will result in a material impact to the Group\u2019s financial position. Further information on estimates and judgements made in relation to this provision are given in note 2. Other provisions, mainly comprise insurance provisions and provisions for remedial costs, most of which are expected to be used over the next year. Company Provisions in the Company relate to funding obligations to a non-trading overseas subsidiary, which eliminate on consolidation. During the prior year, the Company recognised a \u00a340.0m provision in respect of making funds available to the subsidiary delivering the Peterborough & Huntington contract and settlement. In 2022, funds were loaned to the subsidiary to make the settlement payment and the provision has been reclassified as an intercompany loan provision, which eliminates on consolidation.
25 Related party transactions
Group
Related party relationships exist with subsidiaries, joint ventures and associates, joint operations, The Costain Pension
Scheme and with directors and executive officers.
Sales of goods and services
2022
2021
Joint ventures Joint Joint ventures Joint
and associates operations Total and associates operations Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Services of Group employees
0.6
81.2
81.8
0.4
81.4
81.8
Construction services and materials
\u2013
17. 2
17. 2
\u2013
17.3
17. 3
0.6
98.4
99.0
0.4
98.7
99.1
Balances with joint ventures and associates are disclosed in notes 16 and 19. Balances with joint operations are
eliminated on consolidation.
The Costain Pension Scheme
Details of transactions between the Group and The Costain Pension Scheme are included in note 21.
Transactions with key management personnel
Disclosures related to the remuneration of key management personnel as defined in IAS 24 \u2018Related Party Disclosures\u2019
are given in below. Key management personnel, as defined under IAS 24 \u2018Related Party Disclosures\u2019, have been
identified as the Board of directors, as the controls operated by the Group ensure that all key decisions are reserved for
the Board.
As at 13 March 2023, the date of signing of this report, the Directors of the Company and their immediate relatives
control 360,067 ordinary shares in Costain Group PLC, which expressed as a percentage of the issued share capital is
0.13% (2021: 0.15%) of the voting shares of the Company. In addition, Mr Bishoy Azmy, non-independent, non-executive
director is the director representative of the shareholder ASGC which holds 41,666,666 shares and is a c.15% shareholder
of the Company. Bishoy Azmy held no shares in his own name.
In addition to their salaries, in respect of the executive directors and executive officers, the Group provides non-
cash benefits and contributes to defined contribution pension plans. Executive Directors and executive officers also
participate in the Group\u2019s LTIP, DSBP, AIP and SAYE plans, which are detailed in note 21.
The compensation of key management personnel, including the directors, is as follows:
Group
2022 2021
\u00a3m \u00a3m
Directors\u2019 emoluments
1.9
1.2
Executive officers\u2019 emoluments
2.1
1.5
Post-employment benefits
0.1
\u2013
Termination benefits
0.6
\u2013
Share-based payments
0.8
0.6
5.5
3.3
The above amounts are included in employee benefit expense (note 6).
Notes to the Financial Statements continued
Company The Company has no transactions with related parties other than the charge in relation to share-based payments (note 21) (2021: none), and intercompany transactions where the amounts owed by or to Group companies are disclosed in notes 16 and 19. All intercompany transactions are on commercial terms. 26 Disposal of other investments During the year, the Group sold a minor stake in a hotel company for \u00a30.5m. The investment was impaired to \u00a3nil in 2020 reflecting the significant impact of COVID-19 in that sector, so the profit realised this year is also \u00a30.5m. Both the previous impairment (in 2020) and the profit on sale were reported as adjusting items in note 3. 27 Events after the reporting date There are no events after the reporting date.", "dimensions": { "concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-218": { "value": "Costain Group PLC", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-219": { "value": "public limited company", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-220": { "value": "England", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-221": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-222": { "value": "2 Summary of significant accounting policies Basis of preparation Both the Company financial statements and the Group consolidated financial statements have been prepared and approved by the directors in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. On publishing the Parent Company financial statements here together with the Group financial statements, the Company is taking advantage of the exemption in Section 408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements. These financial statements are presented in pounds sterling, rounded to the nearest hundred thousand. The financial statements are prepared on the historical cost basis, except that derivative financial instruments and pension plan assets are measured at their fair value. In preparing the financial statements of the Group we performed an assessment of the impact of climate change, with reference to the disclosures made in the Strategic report. There has been no material impact on the financial statements in the current year from the Group\u2019s assessment of the impact of climate change, including estimates and judgements made, specifically in relation to long-term contract accounting. Related risks and opportunities have been factored into future cash flow forecasts to the best of management\u2019s ability. The preparation of financial statements in conformity with UK-adopted international accounting standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The results of these form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Judgements made by management in the application of UK-adopted international accounting standards that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed later in this note. Going concern The Group\u2019s business activities and the factors likely to affect its future development, performance and position are set out in the Strategic Report. The financial position of the Group, its cash flows, liquidity position, borrowing and bonding facilities, use of financial instruments and hedging activities, exposure to credit risk and its objectives, policies and processes for managing its capital and financial risk are described in the Chief Financial Officer\u2019s review and in note 18. The Group\u2019s principal business activity involves work on the UK\u2019s infrastructure, mostly delivering long-term contracts with a number of customers. To meet its day-to-day working capital requirements, it uses cash balances provided from shareholders\u2019 capital and retained earnings and its borrowing facilities. In November 2022, the Group successfully concluded its negotiations with its bank and surety facility providers to secure a one year \u201camend and extend\u201d of its borrowing facilities. These borrowing facilities give the Group access to an RCF cash drawdown component of \u00a3125.0m with a maturity date of 24 September 2024.
These facilities have a leverage covenant of net debt/EBITDA \u22641.5 times, an interest covenant of EBITA/net interest
payable covenant of \u22654.0 times and a liquidity covenant whereby the aggregate of, without double counting, any cash
and cash equivalent investments and the available commitment under the facility does not fall below \u00a350.0m. These
financial covenants are tested quarterly. As at 31 December 2022, the Group had a leverage covenant ratio of below zero
(the Group had no net debt) and an interest covenant ratio of 16.1 times. As part of its contracting operations, the Group
may be required to provide performance and other bonds. It satisfies these requirements by utilising its \u00a330.0m bank
bonding and \u00a3250.0m surety company bonding facilities.
In determining the appropriate basis of preparation of the financial statements for the year ended 31 December 2022,
the directors are required to consider whether the Group and the Company can continue in operational existence for
the foreseeable future, being a period of at least twelve months from the date of approval of the accounts. Having
undertaken a rigorous assessment of the financial forecasts, including its liquidity and compliance with covenants, the
Board considers that the Group and the Company have adequate resources to remain in operation for the foreseeable
future and, therefore, have adopted the going concern basis in the preparation of the financial statements.
In assessing the going concern assumption, the Board reviewed the Group\u2019s base case plans for the period to 30 June
2024, being the first covenant deadline more than 12 months after the approval of the financial statements. The directors
have assumed that the current RCF remains in place with the same covenant requirements through to its current expiry
date, which is beyond the end of the period reviewed for Going Concern purposes. The directors have assessed that the
Group will either renew the facility thereafter or agree an alternative source of finance for the subsequent period. The
base case assumes delivery of the Board approved strategic and financial plans. As part of the assessment, the Board
also identified severe but plausible downsides affecting future profitability, working capital requirements and cash flow.
The severe but plausible downsides include applying the aggregated impact of lower revenue, lower margins, higher
working capital requirements and adverse contract settlements.
Both the base case and severe but plausible forecasts show significant headroom and indicate that the Group will be able
to operate within its available banking facilities and covenants throughout this period. Covenants are calculated on a rolling
12-month basis each quarter and therefore for all quarters until Q4 of FY23, and Q1 of FY24, a portion of the EBITDA/EBITA
has already been earned, reducing the risk of a potential breach. Taking this into account along with the forecasts reviewed,
it is considered that the EBITA/net interest covenant for the rolling 12 months to Q4 of FY23 and Q1 to Q2 of FY24 is the
potential limiting factor, given the Group\u2019s strong net cash position. The Board concluded that there is sufficient liquidity
headroom in the severe but plausible downside scenario, as well as headroom on the committed facilities and on the
associated financial covenants.
New and amended standards adopted by the Group
The accounting policies set out below have been applied consistently by the Group and the Company to each period
presented in these financial statements, except for the adoption of the new accounting standards noted below.
The Group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 January 2022:
\u2022 Property, Plant and Equipment: Proceeds before intended use \u2013 Amendments to IAS 16;
\u2022 Reference to the Conceptual Framework \u2013 Amendments to IFRS 3; and
\u2022 Onerous Contracts \u2013 Cost of Fulfilling a Contract \u2013 Amendments to IAS 37.
The Group also elected to adopt the following amendments early:
\u2022 Deferred Tax related to Assets and Liabilities arising from a Single Transaction \u2013 Amendments to IAS 12.
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not
expected to significantly affect the current or future periods.
Certain new accounting standards, amendments to accounting standards and interpretations have been published tha t
are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the Group. These
standards, amendments or interpretations are not expected to have a material impact on the entity in the current or
future reporting periods or on foreseeable future transactions.
2 Summary of significant accounting policies continued New and amended standards adopted by the Group continued IFRS 17 \u2018Insurance contracts\u2019 becomes effective for financial periods beginning on or after 1 January 2023. The Group does not provide insurance products or services; however, the definition of an insurance contract under IFRS 17 means that contracts, which meet certain criteria, may be considered insurance contracts, even for non-insurers. For example, contracts that provide services for a fixed fee may meet this definition, where the level of service provided is dependent on uncertain future events (e.g. repairs and maintenance contracts). The Group has a very small number of these contracts and in evaluating the impact of the new standard, consider that the impact, if any, will be immaterial to the financial statements. IFRS 17 replaces IFRS 4 and therefore guarantee contracts previously accounted for under IFRS 4 will now require to be accounted for under IFRS 9 or IFRS 17. The Group is in the process of reviewing its accounting treatment for these contracts but, given the nature of the guarantees issued, does not expect a material impact to the financial statements. Basis of consolidation (a) The Group\u2019s financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are entities controlled by the Group and control exists when the Group is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control starts until the date that control ceases. (b) Associates are operations over which power exists to exercise significant influence but not control, generally accompanied by a share of between 20% and 50% of the voting rights. Associates are accounted for using the equity method. (c) Joint ventures are those joint arrangements where control is shared with another entity, and where the Group has rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method from the date that the joint venture starts until the date that joint control of the entity ceases. (d) The presentation of investments in associates and joint ventures in the statement of financial position restricts the minimum carrying value to \u00a3nil. Where the cost of investment would be negative, due to losses incurred, then an amount up to the value of the negative position is applied to any outstanding loan balance with the investment or, where future funding commitments exist, a provision is made up to the value of the commitment. (e) Joint operations are those joint arrangements over which joint control exists, established by contractual agreement, which are not legal entities and where the parties have rights to the assets and obligations for the liabilities relating to the arrangement. Where a joint operation exists, then the Group entity involved records the assets it controls, the liabilities and expenses it incurs and its share of income. Such joint operations are reported in the consolidated financial statements on the same basis. Transactions between Group companies and joint operations eliminate on consolidation. (f) Intra-Group balances and transactions together with any unrealised gains arising from intra-Group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates, joint ventures and joint operations are eliminated to the extent of the interest in the entity or operation. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Currency translation Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to pounds sterling at the exchange rate ruling at the statement of financial position date. Foreign exchange differences arising on translation are recognised in the income statement. The assets and liabilities of the residual foreign entities are translated to pounds sterling at exchange rates ruling at the statement of financial position date. Income and expenses of foreign entities are translated to pounds sterling at rates approximating to the exchange rates ruling at the dates of these transactions.
Exchange differences arising from the translation of the net investment in the remaining foreign entities are recognised
directly in equity. Those exchange differences that have arisen since 1 January 2004, the date of transition to IFRS, are
presented as a separate component of equity. Cumulative exchange differences are released into the income statement
upon disposal. Translation differences that arose before the date of transition to IFRS in respect of all foreign operations
are not presented as a separate component.
Revenue from contracts with customers
The Group recognises revenue when control over the service or product is transferred to the customer and revenue is
measured at the fair value of the consideration received or receivable, net of value added tax. Where the consideration
is variable, the amount recognised is highly probable not to suffer a significant reversal in future.
The principal source of revenue relates to work on the UK\u2019s infrastructure across transportation, water and energy.
Over 90% arises under long-term contracts, which require delivery of a specified output to the customer, increasingly
involving a technology element, with a large element of the works undertaken on the customer\u2019s land and perhaps
taking a number of years to complete. The majority are structured in a cost reimbursement or target cost form, typically
with incentive and penalty arrangements. Generally, the works specified within the contract are integrated and the
customer procures the one complete package, which may incorporate design, engineering and advisory work into the
scope. Where a contract comprises distinct performance obligations, each is accounted for separately. The scope of
the works will often be subject to change and in the majority of contracts, the terms specify that changes are handled
through compensation events. These are considered on case by case basis to determine whether they are a new,
separate performance obligation and accounted for as such, or part of the original works and dealt with on a cumulative
catch-up basis. On the majority of contracts, the compensation events relate to clarifications or revisions of the original
works. Other design, advisory and consulting contracts requiring production of a specified scope or provision of other
services, some of which may lead to the construction of the designed product, can be structured as inter-dependant or
stand-alone contracts and the resulting performance obligations depend on how the customer procures the contract.
Revenue includes the Group\u2019s share of revenue of joint operations.
(a) Long-term contracts
Revenue arises from the increase in the value of work performed and the value of services provided during the year.
Where the outcome of an individual long-term contract can be estimated reliably and it is probable that the contract will
be profitable, revenue and costs are recognised by reference to the stage of completion of the contract activity at the
statement of financial position date. Stage of completion is assessed by reference to the proportion of contract costs
incurred for the work performed to date relative to the estimated total costs. Contract costs are recognised as expenses
in the period in which they are incurred.
Compensation events, variations and claims, gain from pain/gain arrangements and other bonus assessments are
included in revenue where it is highly probable that the amount, which can be measured reliably, will be recovered
from the customer and will not reverse. Pain from pain/gain arrangements is included where incurred or expected to be
incurred. Revenue in respect of these items is determined on the most likely outcome method. When the outcome of a
long-term contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred,
where it is highly probable those costs will be recoverable and will not reverse. When it is probable that total contract
costs will exceed total revenue, the expected loss is recognised as an expense immediately.
Contract work in progress is stated at cost plus profit recognised to date, including compensation events not yet agreed
but considered highly probable, less a provision for foreseeable losses and less amounts billed and is included in
contract assets. Amounts valued and billed to customers are included in trade receivables. Where cash received from
customers exceeds the value of work performed, the amount is included in contract liabilities.
Any reversal of revenue arising from a change that occurs in the current year but affects the previously recognised
position is recognised within revenue for the current year.
(b) Revenue from other services contracts
Revenue from other services contracts is recognised when the service is provided. The revenue recognised is the amount
that can be measured reliably and is highly probable to flow to the Group and not reverse.
Revenue from contracts with customers continued
(c) Other income
Rental income is recognised in the income statement on a straight-line basis over the term of the lease. Insurance claims
are recognised when they are considered virtually certain.
Income statement presentation \u2013 Adjusting items
To aid understanding of the underlying and overall performance of the Group, certain amounts that the Board considers
to be material or non-recurring in size or nature or related to the accounting treatment of acquisitions are adjusted
because they are not long-term in nature and will not reflect the long-term performance of the Group. Presenting results
on this adjusted basis is consistent with the internal reporting presented to the Board.
The directors exercise judgement in determining the classification of certain items as adjusting using quantitative and
qualitative factors. In assessing whether an item is an adjusting item, the directors give consideration, both individually
and collectively, as to an item\u2019s size, the specific circumstances which have led to the item arising and if the item is likely
to recur, or whether the matter forms part of a group of similar items.
The separate presentation of these items is intended to enhance understanding of the financial performance of the
Group in the particular year under review and the extent to which results are influenced by material unusual and/or
non-recurring items. The tax impact of the above is shown in note 3 to the financial statements on the taxation line.
Consequently, the Group is disclosing as supplementary information \u2018Adjusted revenue, Adjusted profit and Adjusted
earnings per share\u2019 alternative performance measurements. These are reconciled to statutory numbers in note 3 and
reported in the presentation of segmental reporting in note 4.
The Group also presents net cash/bank debt as an alternative performance measure. The directors consider that this
provides useful information about the Group\u2019s liquidity position.
Pre-contract costs
Costs associated with bidding for contracts are written off as incurred.
Research and development
Research and development activities are usually directly attributable to a project and accounted for within project
costs. In line with common practice, the Group has adopted the research and development expenditure credit (RDEC)
regime as these credits have characteristics similar to government grants. Development expenditure that satisfies all the
relevant conditions is capitalised as an intangible asset (see below).
Goodwill and other intangible assets
Goodwill arising on acquisitions represents the excess of the fair value of the consideration over the identifiable assets,
liabilities and contingent liabilities of the acquired entity and goodwill arising on the acquisition of subsidiaries is
included in non-current assets. The attributable costs of acquisitions are expensed to the income statement.
Goodwill is reviewed annually for impairment and is carried at cost less accumulated impairment losses. Goodwill is
included when determining the profit or loss on subsequent disposal of the business to which it relates.
Acquired intangible assets comprise customer relationships, order book, brand and intellectual property. Other
intangible assets comprise computer software, development expenditure and patents. Customer relationships and other
acquired intangibles are measured at the present value of cash flows attributable to the relationship less an appropriate
contributory asset charge. Computer software, development expenditure and patents are recognised at cost.
Internally generated development expenditure is recognised as an intangible asset only if all of the following conditions
are satisfied:
\u2022 the asset can be identified;
\u2022 it is probable that the asset will create future economic benefits; and
\u2022 the development costs can be measured reliably.
Notes to the Financial Statements continued
Costain Group PLC
Annual Report and Accounts 2022
148
Once the asset is complete, subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates, otherwise expenditure is expensed as incurred. Amortisation begins when an asset is acquired or, in the case of computer software and other development assets, is available for use and is amortised over the following periods: Customer relationships \u2013 on a straight-line basis up to seven years Other intangibles (including other acquired) \u2013 on a straight-line basis up to five years Property, plant and equipment Property, plant and equipment is carried at cost less accumulated depreciation and impairment losses. Where parts of an item of property, plant and equipment have different useful lives, they are accounted as separate items. Cost comprises purchase price and directly attributable costs. Freehold land is not depreciated. For all other property, plant and equipment, depreciation is calculated on a straight-line basis to allocate cost less residual values of the assets over their estimated useful lives as follows: Freehold buildings \u2013 50 years Leasehold buildings \u2013 shorter of 50 years or lease term Plant and equipment \u2013 3 to 10 years The assets\u2019 residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of financial position date. Investments \u2013 Company Company investments in subsidiaries are carried at cost less provisions for impairment. Impairment of non-financial assets For the purposes of impairment testing, goodwill is allocated to the cash generating units expected to benefit from the synergies of the combination. Cash generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. The carrying amounts of other non-financial assets, except deferred tax assets, are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset\u2019s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset, or its cash generating unit, is less than the recoverable amount. Impairment losses are recognised in the income statement. An impairment loss (other than in relation to goodwill) is reversed if there has been a change in estimates, resulting in the recoverable amount exceeding the impaired carrying value of the asset. An impairment loss is reversed only to the extent that the carrying amount of the assets does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Provisions A provision is recognised in the statement of financial position when there is a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. A provision for onerous contracts is recognised when the expected benefits to be derived from a contract are lower than the unavoidable cost of meeting the obligations under the contract. 2 Summary of significant accounting policies continued Taxation The tax expense represents the sum of UK corporation tax and overseas tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it excludes items that are never taxable or deductible. The liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all temporary differences except for those specific exemptions set out below and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each statement of financial position date. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of other assets and liabilities (other than in a business combination) in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for temporary differences arising on investments in subsidiaries and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates based on those enacted or substantially enacted at the statement of financial position date. Deferred tax is charged or credited in the income statement except when it relates to items charged or credited directly to equity, in which case the deferred tax is also recognised in equity. Additional taxes arising from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. Leases Where the Group is party to a lease, except for short-term leases or leases of low value assets (as noted below), the Group recognises a right-of-use asset and a lease liability upon lease commencement. The major categories of leased items within the scope of IFRS 16 are properties, vehicles and site plant. Changes to contract scope can lengthen or shorten contract programmes and result in extensions or early terminations to site plant lease terms. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, any initial direct costs incurred and an estimate of costs to dismantle and remove or to restore the underlying asset or the site on which is located, less any lease incentives received. The asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the end of lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is reduced by any impairment losses and adjusted for certain remeasurements of the lease liability associated with changes to the lease term. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the incremental borrowing rate. The amount charged to the income statement comprises the depreciation of the right-of-use asset and the imputed interest on the lease liability. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less. Guarantee contracts Customers awarding long-term contracting work may, as a condition of the award, require the contractor to provide performance and other bonds. Group bank borrowing facilities and bank and surety bonding facilities are supported by cross-guarantees given by the Company and participating companies in the Group. The Company considers these to be insurance arrangements under IFRS 4 and accounts for them as such. In this respect, the guarantee contract is treated as a contingent liability until such time as it becomes probable that a payment under the guarantee will be required. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Dividends Dividends are recognised as distributions in the period in which they are declared. Dividends proposed but not declared are not recognised but are disclosed in note 11 to the financial statements. Share-based payments These comprise equity-settled share-based compensation plans. Equity-settled share-based payments are measured at fair value at the date of grant and the fair value is expensed over the vesting period, based on the estimate of awards that will eventually vest. Fair value is measured using a Black- Scholes option pricing model. Where options over shares in the Company are granted to employees of subsidiaries, the Company recognises in its financial statements an increase in the cost of investment in its subsidiaries equivalent to the equity-settled share-based payment charge recognised in its subsidiaries\u2019 financial statements, with the corresponding credit being recognised directly in equity. Retirement benefit obligations A defined benefit pension scheme is operated in the UK, which provides benefits based on pensionable salary. The details are included in note 21. The assets of the scheme are held separately from those of the Group. Pension scheme assets are measured using market values. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high-quality corporate bond of equivalent term and currency to the liability. The liability or asset recognised in the statement of financial position in respect of the defined benefit pension scheme is the difference between the present value of the defined benefit obligations and the fair value of scheme assets at the statement of financial position date. An asset is recognised because any surplus on the Costain Pension Scheme would be recoverable by way of a refund, as the Group has the unconditional right to any surplus once all the obligations of the Scheme have been settled. Administration costs of the scheme are recognised in the income statement. The interest income or cost on the scheme\u2019s net asset or liabilities is included in net finance expense. Remeasurements of the net asset or liability are recognised in the consolidated statement of comprehensive income. Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. Financial assets and liabilities Financial assets and financial liabilities are recognised in the Group\u2019s statement of financial position when the Group becomes a party to the contractual provisions of the instrument. (a) Financial assets The classification depends on the nature and purpose of the financial asset and is determined at the time of initial recognition. A financial asset is derecognised only when the contractual rights to the cash flows from that asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. 2 Summary of significant accounting policies continued Financial assets and liabilities continued (a) Financial assets continued Trade and other receivables Trade and other receivables do not carry interest and are stated at amortised cost less loss allowances. Trade receivables mostly relate to long-term contracts. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. This policy applies to both the statement of financial position and the cash flow statement. Impairment of financial assets Impairment of financial assets is based on an expected credit loss model applying the simplified approach permitted under IFRS 9. The Group calculates an allowance for credit losses based on the nature of the customer, experience of collecting receivables from similar customers and modelling default scenarios and applying probabilities of such scenarios. (b) Financial liabilities Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. Financial liabilities are derecognised only when the obligations are discharged, cancelled or expire. Trade and other payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. (c) Derivative financial instruments Derivative financial instruments are used to manage risks arising from changes in foreign exchange rates and interest rates and are measured at their fair value as explained in the cash flow hedges section of note 18. Certain derivative financial instruments are designated as cash flow hedges in line with established risk management policies. These hedge exposure to variability in cash flows that is attributable to either a particular risk associated with a recognised asset or liability or a forecast transaction. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in equity, with any ineffective portion in the income statement. When hedged cash flows result in the recognition of a non-financial asset or liability, the associated gains or losses previously recognised in equity are included in the initial measurement of the asset or liability. For all other cash flow hedges, the gains or losses that are recognised in equity are transferred to the income statement in the same period in which the hedged cash flow affects the income statement. Hedge accounting is discontinued when the hedging instrument expires or is sold, is terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss previously recognised in equity is retained in equity until the hedged transaction occurs. If the hedged transaction is no longer expected to occur, the net cumulative gain or loss is transferred to the income statement. Any gains or losses arising from changes in fair value of derivative financial instruments not designated as hedges are recognised in the income statement. Fair value measurement When measuring the fair value of a financial or non-financial asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: \u2022 Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. \u2022 Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). \u2022 Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair valu e hierarchy, then the fair value measurement is categorised in its entirety in the same level of the hierarchy as the lowest level input that is significant to the entire measurement. Significant areas of judgement and estimation The estimates and underlying assumptions used in the preparation of these financial statements are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The most critical accounting policies and significant areas of estimation and judgement arise from the accounting for long- term contracts under IFRS 15 \u2018Revenue from Contracts with Customers\u2019, the carrying value of goodwill, the assumptions used in the accounting for defined benefit pension schemes under IAS 19 \u2018Employee benefits\u2019, the recognition of deferred tax assets in relation to tax losses and the items classified as other items and contract adjustments. Long-term contracts The majority of the Group\u2019s activities are undertaken via long-term contracts and IFRS 15 requires the identification and separation of individual, distinct performance obligations, which are then accounted for individually. The most common type of contracts undertaken by the Group with multiple performance obligations are framework contracts. In most cases, the obligations are satisfied over time and estimates are made of the total contract costs and revenues. In many cases, these obligations span more than one financial period. Both cost and revenue forecasts may be affected by a number of uncertainties that depend on the outcome of future events and may need to be revised as events unfold and uncertainties are resolved. Cost forecasts take into account the expectations of work to be undertaken on the contract. Revenue forecasts take into account compensation events, variations and claims and assessments, for example, of the impact of pain/gain arrangements to the extent that the amounts the Group expects to recover can be reliably estimated and are highly probable not to reverse. Management bases its estimates of costs and revenues and its assessment of the expected outcome of each long- term contractual obligation on the latest available information. This includes detailed contract valuations, progress on discussions over compensation events, variations and claims with customers, progress against the latest programme for completing the works, forecasts of the costs to complete and, in certain cases, assessments of recoveries from insurers, suppliers and contractors, where these are considered virtually certain. Revenue is recognised to the extent that amounts forecast from compensation events, variations and claims are agreed or considered in management\u2019s judgement highly probable to be agreed. There are four material contracts where management has been required to make significant accounting estimates and, which result in estimation uncertainty, as at 31 December 2022. In relation to these contracts, the Group has included estimated recoveries with a combined value of \u00a312.2m, on the basis that these are considered highly probable not to reverse. However, there are a range of factors which will affect the ultimate outcome once these contracts are finalised. Management considers that the estimation uncertainty in relation to these four contracts ranges from a potential upside of \u00a322.6m to a downside of \u00a312.2m. The ultimate financial impact of this estimation uncertainty will depend, inter alia, on the terms of the contract and the interaction with incentive arrangements, such as pain/gain mechanisms and bonus or KPI arrangements, as well as final conclusions regarding claims and compensation events and assessments of, for example, costs disallowed under the contract. 2 Summary of significant accounting policies continued Significant areas of judgement and estimation continued Long-term contracts continued The estimates of the forecast contract outcome and the profit or loss earned to date are updated regularly and significant changes are highlighted through established internal review procedures. The impact of any change in the accounting estimates both positive and negative is then reflected in the financial statements. While management believes it has recorded positions that are highly probable not to reverse on the basis of existing facts and circumstances, there are uncertain factors which will impact the final contract outcome and could give rise to material adjustments within the next financial year. Given the inherent complexity and pervasive impact of the various judgements and estimates impacting revenue, cost of sales and related balance sheet amounts, it is not considered plausible to quantify the impact of taking alternative assessments on each of these judgements. Rectification provision: Contract in the water sector In 2021, Costain recognised a provision of \u00a36.2m in respect of the estimated future costs of expected rectification works required at a customer\u2019s water treatment facility where the Group had been prime contractor. During 2022, working with designers, insurers and the customer, there is now greater clarity as to the scope and cost of rectification work required, albeit a final solution has yet to be formally agreed with all relevant parties. As at 31 December 2022, the Group\u2019s best estimate of the cost of the single most likely rectification solution is \u00a317.0m, of which costs of \u00a34.8m have been incurred. Accordingly a provision of \u00a312.2m has been included in the statement of financial position and disclosed in note 20. The work is expected to be concluded in 2024. Whilst the cost of rectification work is capable of being estimated, a number of assumptions have had to be made in arriving at the cost estimate. This, combined with the fact that the final design solution has not been finalised, results in there being inherent estimation uncertainty in determining the ultimate cost and associated provision. Management considers that the ultimate cost will fall within a range of \u00b130% of the estimated total cost of \u00a317m. Costain has engaged with its insurers and received confirmation that insurance cover is available and that all reasonable costs of rectification work that are validly incurred will be met by insurers. Consistent with this, insurers made an interim payment on account during 2022. On this basis, management has made a judgement that the costs of rectification, after deduction of insurers\u2019 excess and amounts already received from insurers, will be recovered. Accordingly, an insurance receivable of \u00a313.4m has been recognised in the statement of financial position in accordance with IAS 37 on the basis that recovery is considered virtually certain. There is a cap on insurance but the cap is significantly in excess of the cost estimate. As at 31 December 2021, discussions with insurers were at an early stage and the expected recovery from insurers was not recognised as a receivable on the basis that it could not be considered virtually certain. Peterborough & Huntingdon On 24 February 2022, Costain announced that it had reached a final settlement with National Grid regarding the Peterborough & Huntingdon contract. The settlement agreement brought an end to the dispute after the contract was mutually terminated in June 2020 and prevents any further claims under the contract. In 2022, Costain made a full and final payment of \u00a343.4m to National Grid (which was fully provided for in 2021) and recognised a \u00a35.2m insurance recovery. Also see note 3. Carrying value of goodwill Assessing the recoverability of the carrying value of goodwill recognised on acquisition requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. These assessments involve estimation and judgement, principally, in respect of the levels of operating margins, growth rates and future cash flows of the cash generating units and also include consideration of the impact of potential sensitivities in respect of those assumptions. The discount rates used to calculate present values and related sensitivities are set out in note 12. Defined benefit pension scheme Defined benefit pension schemes require significant estimates in relation to the assumptions for the discount rate, inflation and member longevity that underpin the valuation. Each year in selecting the appropriate assumptions, the directors take advice from an independent qualified actuary. The assumptions and resultant sensitivities are set out in note 21.
Deferred tax
Included in deferred tax assets is an asset for tax losses recorded in current and prior years. The asset is recognised on
the basis that the losses will be used against future taxable profits of the Group over the next five years. The significant
judgement in assessing the recoverability relates to the ability of the Group to achieve its taxable profit forecasts and the
ability to withstand the application of what the Board considers appropriate sensitivities. Details of deferred tax assets
are shown in note 9.
Adjusting items
As described in this note, management has used judgement to determine the items classified as adjusting items and set
out in note 3.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-223": { "value": "Basis of preparation Both the Company financial statements and the Group consolidated financial statements have been prepared and approved by the directors in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. On publishing the Parent Company financial statements here together with the Group financial statements, the Company is taking advantage of the exemption in Section 408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements. These financial statements are presented in pounds sterling, rounded to the nearest hundred thousand. The financial statements are prepared on the historical cost basis, except that derivative financial instruments and pension plan assets are measured at their fair value. In preparing the financial statements of the Group we performed an assessment of the impact of climate change, with reference to the disclosures made in the Strategic report. There has been no material impact on the financial statements in the current year from the Group\u2019s assessment of the impact of climate change, including estimates and judgements made, specifically in relation to long-term contract accounting. Related risks and opportunities have been factored into future cash flow forecasts to the best of management\u2019s ability. The preparation of financial statements in conformity with UK-adopted international accounting standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The results of these form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Judgements made by management in the application of UK-adopted international accounting standards that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed later in this note", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-224": { "value": "Both the Company financial statements and the Group consolidated financial statements have been prepared and approved by the directors in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-225": { "value": "Going concern The Group\u2019s business activities and the factors likely to affect its future development, performance and position are set out in the Strategic Report. The financial position of the Group, its cash flows, liquidity position, borrowing and bonding facilities, use of financial instruments and hedging activities, exposure to credit risk and its objectives, policies and processes for managing its capital and financial risk are described in the Chief Financial Officer\u2019s review and in note 18. The Group\u2019s principal business activity involves work on the UK\u2019s infrastructure, mostly delivering long-term contracts with a number of customers. To meet its day-to-day working capital requirements, it uses cash balances provided from shareholders\u2019 capital and retained earnings and its borrowing facilities. In November 2022, the Group successfully concluded its negotiations with its bank and surety facility providers to secure a one year \u201camend and extend\u201d of its borrowing facilities. These borrowing facilities give the Group access to an RCF cash drawdown component of \u00a3125.0m with a maturity date of 24 September 2024. These facilities have a leverage covenant of net debt/EBITDA \u22641.5 times, an interest covenant of EBITA/net interest payable covenant of \u22654.0 times and a liquidity covenant whereby the aggregate of, without double counting, any cash and cash equivalent investments and the available commitment under the facility does not fall below \u00a350.0m. These financial covenants are tested quarterly. As at 31 December 2022, the Group had a leverage covenant ratio of below zero (the Group had no net debt) and an interest covenant ratio of 16.1 times. As part of its contracting operations, the Group may be required to provide performance and other bonds. It satisfies these requirements by utilising its \u00a330.0m bank bonding and \u00a3250.0m surety company bonding facilities. In determining the appropriate basis of preparation of the financial statements for the year ended 31 December 2022, the directors are required to consider whether the Group and the Company can continue in operational existence for the foreseeable future, being a period of at least twelve months from the date of approval of the accounts. Having undertaken a rigorous assessment of the financial forecasts, including its liquidity and compliance with covenants, the Board considers that the Group and the Company have adequate resources to remain in operation for the foreseeable future and, therefore, have adopted the going concern basis in the preparation of the financial statements. In assessing the going concern assumption, the Board reviewed the Group\u2019s base case plans for the period to 30 June 2024, being the first covenant deadline more than 12 months after the approval of the financial statements. The directors have assumed that the current RCF remains in place with the same covenant requirements through to its current expiry date, which is beyond the end of the period reviewed for Going Concern purposes. The directors have assessed that the Group will either renew the facility thereafter or agree an alternative source of finance for the subsequent period. The base case assumes delivery of the Board approved strategic and financial plans. As part of the assessment, the Board also identified severe but plausible downsides affecting future profitability, working capital requirements and cash flow. The severe but plausible downsides include applying the aggregated impact of lower revenue, lower margins, higher working capital requirements and adverse contract settlements. Both the base case and severe but plausible forecasts show significant headroom and indicate that the Group will be able to operate within its available banking facilities and covenants throughout this period. Covenants are calculated on a rolling 12-month basis each quarter and therefore for all quarters until Q4 of FY23, and Q1 of FY24, a portion of the EBITDA/EBITA has already been earned, reducing the risk of a potential breach. Taking this into account along with the forecasts reviewed, it is considered that the EBITA/net interest covenant for the rolling 12 months to Q4 of FY23 and Q1 to Q2 of FY24 is the potential limiting factor, given the Group\u2019s strong net cash position. The Board concluded that there is sufficient liquidity headroom in the severe but plausible downside scenario, as well as headroom on the committed facilities and on the associated financial covenants. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-226": { "value": "The Group\u2019s principal business activity involves work on the UK\u2019s infrastructure, mostly delivering long-term contracts with a number of customers.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-227": { "value": "New and amended standards adopted by the Group The accounting policies set out below have been applied consistently by the Group and the Company to each period presented in these financial statements, except for the adoption of the new accounting standards noted below. The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2022: \u2022 Property, Plant and Equipment: Proceeds before intended use \u2013 Amendments to IAS 16; \u2022 Reference to the Conceptual Framework \u2013 Amendments to IFRS 3; and \u2022 Onerous Contracts \u2013 Cost of Fulfilling a Contract \u2013 Amendments to IAS 37. The Group also elected to adopt the following amendments early: \u2022 Deferred Tax related to Assets and Liabilities arising from a Single Transaction \u2013 Amendments to IAS 12. The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. ", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-228": { "value": "Certain new accounting standards, amendments to accounting standards and interpretations have been published tha are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the Group. These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods or on foreseeable future transactions. New and amended standards adopted by the Group continued IFRS 17 \u2018Insurance contracts\u2019 becomes effective for financial periods beginning on or after 1 January 2023. The Group does not provide insurance products or services; however, the definition of an insurance contract under IFRS 17 means that contracts, which meet certain criteria, may be considered insurance contracts, even for non-insurers. For example, contracts that provide services for a fixed fee may meet this definition, where the level of service provided is dependent on uncertain future events (e.g. repairs and maintenance contracts). The Group has a very small number of these contracts and in evaluating the impact of the new standard, consider that the impact, if any, will be immaterial to the financial statements. IFRS 17 replaces IFRS 4 and therefore guarantee contracts previously accounted for under IFRS 4 will now require to be accounted for under IFRS 9 or IFRS 17. The Group is in the process of reviewing its accounting treatment for these contracts but, given the nature of the guarantees issued, does not expect a material impact to the financial statements. ", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-229": { "value": "IFRS 17 \u2018Insurance contracts\u2019 becomes effective for financial periods beginning on or after 1 January 2023. The Group does not provide insurance products or services; however, the definition of an insurance contract under IFRS 17 means that contracts, which meet certain criteria, may be considered insurance contracts, even for non-insurers. For example, contracts that provide services for a fixed fee may meet this definition, where the level of service provided is dependent on uncertain future events (e.g. repairs and maintenance contracts). The Group has a very small number of these contracts and in evaluating the impact of the new standard, consider that the impact, if any, will be immaterial to the financial statements. IFRS 17 replaces IFRS 4 and therefore guarantee contracts previously accounted for under IFRS 4 will now require to be accounted for under IFRS 9 or IFRS 17. The Group is in the process of reviewing its accounting treatment for these contracts but, given the nature of the guarantees issued, does not expect a material impact to the financial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantJudgementsAndChangesInJudgementsMadeInApplyingIFRS17Explanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-230": { "value": "Basis of consolidation (a) The Group\u2019s financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are entities controlled by the Group and control exists when the Group is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control starts until the date that control ceases. (b) Associates are operations over which power exists to exercise significant influence but not control, generally accompanied by a share of between 20% and 50% of the voting rights. Associates are accounted for using the equity method. (c) Joint ventures are those joint arrangements where control is shared with another entity, and where the Group has rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method from the date that the joint venture starts until the date that joint control of the entity ceases. (d) The presentation of investments in associates and joint ventures in the statement of financial position restricts the minimum carrying value to \u00a3nil. Where the cost of investment would be negative, due to losses incurred, then an amount up to the value of the negative position is applied to any outstanding loan balance with the investment or, where future funding commitments exist, a provision is made up to the value of the commitment. (e) Joint operations are those joint arrangements over which joint control exists, established by contractual agreement, which are not legal entities and where the parties have rights to the assets and obligations for the liabilities relating to the arrangement. Where a joint operation exists, then the Group entity involved records the assets it controls, the liabilities and expenses it incurs and its share of income. Such joint operations are reported in the consolidated financial statements on the same basis. Transactions between Group companies and joint operations eliminate on consolidation. (f) Intra-Group balances and transactions together with any unrealised gains arising from intra-Group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates, joint ventures and joint operations are eliminated to the extent of the interest in the entity or operation. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-231": { "value": "Currency translation Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to pounds sterling at the exchange rate ruling at the statement of financial position date. Foreign exchange differences arising on translation are recognised in the income statement. The assets and liabilities of the residual foreign entities are translated to pounds sterling at exchange rates ruling at the statement of financial position date. Income and expenses of foreign entities are translated to pounds sterling at rates approximating to the exchange rates ruling at the dates of these transactions. Exchange differences arising from the translation of the net investment in the remaining foreign entities are recognised directly in equity. Those exchange differences that have arisen since 1 January 2004, the date of transition to IFRS, are presented as a separate component of equity. Cumulative exchange differences are released into the income statement upon disposal. Translation differences that arose before the date of transition to IFRS in respect of all foreign operations are not presented as a separate component. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-232": { "value": "Revenue from contracts with customers The Group recognises revenue when control over the service or product is transferred to the customer and revenue is measured at the fair value of the consideration received or receivable, net of value added tax. Where the consideration is variable, the amount recognised is highly probable not to suffer a significant reversal in future. The principal source of revenue relates to work on the UK\u2019s infrastructure across transportation, water and energy. Over 90% arises under long-term contracts, which require delivery of a specified output to the customer, increasingly involving a technology element, with a large element of the works undertaken on the customer\u2019s land and perhaps taking a number of years to complete. The majority are structured in a cost reimbursement or target cost form, typically with incentive and penalty arrangements. Generally, the works specified within the contract are integrated and the customer procures the one complete package, which may incorporate design, engineering and advisory work into the scope. Where a contract comprises distinct performance obligations, each is accounted for separately. The scope of the works will often be subject to change and in the majority of contracts, the terms specify that changes are handled through compensation events. These are considered on case by case basis to determine whether they are a new, separate performance obligation and accounted for as such, or part of the original works and dealt with on a cumulative catch-up basis. On the majority of contracts, the compensation events relate to clarifications or revisions of the original works. Other design, advisory and consulting contracts requiring production of a specified scope or provision of other services, some of which may lead to the construction of the designed product, can be structured as inter-dependant or stand-alone contracts and the resulting performance obligations depend on how the customer procures the contract. Revenue includes the Group\u2019s share of revenue of joint operations. (a) Long-term contracts Revenue arises from the increase in the value of work performed and the value of services provided during the year. Where the outcome of an individual long-term contract can be estimated reliably and it is probable that the contract will be profitable, revenue and costs are recognised by reference to the stage of completion of the contract activity at the statement of financial position date. Stage of completion is assessed by reference to the proportion of contract costs incurred for the work performed to date relative to the estimated total costs. Contract costs are recognised as expenses in the period in which they are incurred. Compensation events, variations and claims, gain from pain/gain arrangements and other bonus assessments are included in revenue where it is highly probable that the amount, which can be measured reliably, will be recovered from the customer and will not reverse. Pain from pain/gain arrangements is included where incurred or expected to be incurred. Revenue in respect of these items is determined on the most likely outcome method. When the outcome of a long-term contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred, where it is highly probable those costs will be recoverable and will not reverse. When it is probable that total contract costs will exceed total revenue, the expected loss is recognised as an expense immediately. Contract work in progress is stated at cost plus profit recognised to date, including compensation events not yet agreed but considered highly probable, less a provision for foreseeable losses and less amounts billed and is included in contract assets. Amounts valued and billed to customers are included in trade receivables. Where cash received from customers exceeds the value of work performed, the amount is included in contract liabilities. Any reversal of revenue arising from a change that occurs in the current year but affects the previously recognised position is recognised within revenue for the current year. (b) Revenue from other services contracts Revenue from other services contracts is recognised when the service is provided. The revenue recognised is the amount that can be measured reliably and is highly probable to flow to the Group and not reverse. Revenue from contracts with customers continued (c) Other income Rental income is recognised in the income statement on a straight-line basis over the term of the lease. Insurance claims are recognised when they are considered virtually certain. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-233": { "value": "Revenue from contracts with customers The Group recognises revenue when control over the service or product is transferred to the customer and revenue is measured at the fair value of the consideration received or receivable, net of value added tax. Where the consideration is variable, the amount recognised is highly probable not to suffer a significant reversal in future. The principal source of revenue relates to work on the UK\u2019s infrastructure across transportation, water and energy. Over 90% arises under long-term contracts, which require delivery of a specified output to the customer, increasingly involving a technology element, with a large element of the works undertaken on the customer\u2019s land and perhaps taking a number of years to complete. The majority are structured in a cost reimbursement or target cost form, typically with incentive and penalty arrangements. Generally, the works specified within the contract are integrated and the customer procures the one complete package, which may incorporate design, engineering and advisory work into the scope. Where a contract comprises distinct performance obligations, each is accounted for separately. The scope of the works will often be subject to change and in the majority of contracts, the terms specify that changes are handled through compensation events. These are considered on case by case basis to determine whether they are a new, separate performance obligation and accounted for as such, or part of the original works and dealt with on a cumulative catch-up basis. On the majority of contracts, the compensation events relate to clarifications or revisions of the original works. Other design, advisory and consulting contracts requiring production of a specified scope or provision of other services, some of which may lead to the construction of the designed product, can be structured as inter-dependant or stand-alone contracts and the resulting performance obligations depend on how the customer procures the contract. Revenue includes the Group\u2019s share of revenue of joint operations. 15 Assets and liabilities related to contracts with customersThe Group has recognised the following assets and liabilities related to contracts with customers, in addition to amounts included in trade receivables: 2022 2021 \u00a3m \u00a3m Contract assets 50.8 39.9 Non-current assets recognised relating to customer retentions 3.4 5.5 Contract liabilities (1.4) (10.7) Contract assets is made up of a portfolio of contracts and represents unbilled amounts and includes amounts arising from changes to the scope of works that have been recognised as revenue but not yet billed to the customer. In the prior year, the reversal of revenue (as included in note 3) resulted in a decrease in contract assets of \u00a343.4m. There are no other significant one-off factors outside of normal trading contributing to the increase in contract assets. Contract liabilities result when cumulative cash received exceeds cumulative revenue on any particular contract. On contracts undertaken by the Group, this typically results from work being undertaken, or on framework contracts awarded, in a different order to the programme envisaged in the contractual payments schedule. There are no significant one-off factors outside of normal trading contributing to the decrease in contract liabilities. Revenue recognised in 2022 from performance obligations satisfied in previous periods was immaterial. The aggregate amount of costs incurred plus recognised profits, less recognised losses, for all contracts in progress at the statement of financial position date was \u00a33,501.3m (2021: \u00a34,041.3m). Progress billings and advances received from customers under open construction contracts amounted to \u00a33,485.3m (2021: \u00a34,057.8m). Advances for which work has not started, and billings in excess of costs incurred and recognised profits are included in credit balances on long-term contracts. Unsatisfied long-term contracts The following table shows unsatisfied performance obligations resulting from long-term contracts: 2022 2021 \u00a3m \u00a3m Aggregate amount of the transaction price allocated to long-term contracts that are partially or fully unsatisfied as at 31 December 1,812.6 2,633.5 Management expects that approximately 48% of the transaction price allocated to the unsatisfied contracts as of 31 December 2022 will be recognised as revenue during the next reporting period (\u00a3875.8m). Of the remaining 52%, 38% will be recognised during 2024 to 2026. Mobilisation costs and costs incurred to obtain a contract The Group does not have any assets relating to mobilisation costs or costs incurred to obtain a contract. ", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-234": { "value": "Income statement presentation \u2013 Adjusting items To aid understanding of the underlying and overall performance of the Group, certain amounts that the Board considers to be material or non-recurring in size or nature or related to the accounting treatment of acquisitions are adjusted because they are not long-term in nature and will not reflect the long-term performance of the Group. Presenting results on this adjusted basis is consistent with the internal reporting presented to the Board. The directors exercise judgement in determining the classification of certain items as adjusting using quantitative and qualitative factors. In assessing whether an item is an adjusting item, the directors give consideration, both individually and collectively, as to an item\u2019s size, the specific circumstances which have led to the item arising and if the item is likely to recur, or whether the matter forms part of a group of similar items. The separate presentation of these items is intended to enhance understanding of the financial performance of the Group in the particular year under review and the extent to which results are influenced by material unusual and/or non-recurring items. The tax impact of the above is shown in note 3 to the financial statements on the taxation line. Consequently, the Group is disclosing as supplementary information \u2018Adjusted revenue, Adjusted profit and Adjusted earnings per share\u2019 alternative performance measurements. These are reconciled to statutory numbers in note 3 and reported in the presentation of segmental reporting in note 4. The Group also presents net cash/bank debt as an alternative performance measure. The directors consider that this provides useful information about the Group\u2019s liquidity position. ", "dimensions": { "concept": "cost:DiscriptionOfAccountingPolicyForAdjustingItemsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-235": { "value": "Pre-contract costs Costs associated with bidding for contracts are written off as incurred. ", "dimensions": { "concept": "cost:DiscriptionOfAccountingPolicyForPreContractCostsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-236": { "value": "Research and development Research and development activities are usually directly attributable to a project and accounted for within project costs. In line with common practice, the Group has adopted the research and development expenditure credit (RDEC) regime as these credits have characteristics similar to government grants. Development expenditure that satisfies all the relevant conditions is capitalised as an intangible asset (see below). ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-237": { "value": "Goodwill and other intangible assets Goodwill arising on acquisitions represents the excess of the fair value of the consideration over the identifiable assets, liabilities and contingent liabilities of the acquired entity and goodwill arising on the acquisition of subsidiaries is included in non-current assets. The attributable costs of acquisitions are expensed to the income statement. Goodwill is reviewed annually for impairment and is carried at cost less accumulated impairment losses. Goodwill is included when determining the profit or loss on subsequent disposal of the business to which it relates. Acquired intangible assets comprise customer relationships, order book, brand and intellectual property. Other intangible assets comprise computer software, development expenditure and patents. Customer relationships and other acquired intangibles are measured at the present value of cash flows attributable to the relationship less an appropriate contributory asset charge. Computer software, development expenditure and patents are recognised at cost. Internally generated development expenditure is recognised as an intangible asset only if all of the following conditions are satisfied: \u2022 the asset can be identified; \u2022 it is probable that the asset will create future economic benefits; and \u2022 the development costs can be measured reliably. Once the asset is complete, subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates, otherwise expenditure is expensed as incurred. Amortisation begins when an asset is acquired or, in the case of computer software and other development assets, is available for use and is amortised over the following periods: Customer relationships \u2013 on a straight-line basis up to seven years Other intangibles (including other acquired) \u2013 on a straight-line basis up to five years ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-238": { "value": "Property, plant and equipment Property, plant and equipment is carried at cost less accumulated depreciation and impairment losses. Where parts of an item of property, plant and equipment have different useful lives, they are accounted as separate items. Cost comprises purchase price and directly attributable costs. Freehold land is not depreciated. For all other property, plant and equipment, depreciation is calculated on a straight-line basis to allocate cost less residual values of the assets over their estimated useful lives as follows: Freehold buildings \u2013 50 years Leasehold buildings \u2013 shorter of 50 years or lease term Plant and equipment \u2013 3 to 10 years The assets\u2019 residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of financial position date. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-239": { "value": "Investments \u2013 Company Company investments in subsidiaries are carried at cost less provisions for impairment. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-240": { "value": "Impairment of non-financial assets For the purposes of impairment testing, goodwill is allocated to the cash generating units expected to benefit from the synergies of the combination. Cash generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. The carrying amounts of other non-financial assets, except deferred tax assets, are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset\u2019s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset, or its cash generating unit, is less than the recoverable amount. Impairment losses are recognised in the income statement. An impairment loss (other than in relation to goodwill) is reversed if there has been a change in estimates, resulting in the recoverable amount exceeding the impaired carrying value of the asset. An impairment loss is reversed only to the extent that the carrying amount of the assets does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-241": { "value": "Provisions A provision is recognised in the statement of financial position when there is a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. A provision for onerous contracts is recognised when the expected benefits to be derived from a contract are lower than the unavoidable cost of meeting the obligations under the contract. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-242": { "value": "Taxation The tax expense represents the sum of UK corporation tax and overseas tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit before tax as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it excludes items that are never taxable or deductible. The liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the statement of financial position date. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-243": { "value": "Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all temporary differences except for those specific exemptions set out below and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each statement of financial position date. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of other assets and liabilities (other than in a business combination) in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for temporary differences arising on investments in subsidiaries and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates based on those enacted or substantially enacted at the statement of financial position date. Deferred tax is charged or credited in the income statement except when it relates to items charged or credited directly to equity, in which case the deferred tax is also recognised in equity. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-244": { "value": "Additional taxes arising from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTaxesOtherThanIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-245": { "value": "Leases Where the Group is party to a lease, except for short-term leases or leases of low value assets (as noted below), the Group recognises a right-of-use asset and a lease liability upon lease commencement. The major categories of leased items within the scope of IFRS 16 are properties, vehicles and site plant. Changes to contract scope can lengthen or shorten contract programmes and result in extensions or early terminations to site plant lease terms. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, any initial direct costs incurred and an estimate of costs to dismantle and remove or to restore the underlying asset or the site on which is located, less any lease incentives received. The asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the end of lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is reduced by any impairment losses and adjusted for certain remeasurements of the lease liability associated with changes to the lease term. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the incremental borrowing rate. The amount charged to the income statement comprises the depreciation of the right-of-use asset and the imputed interest on the lease liability. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-246": { "value": "Guarantee contracts Customers awarding long-term contracting work may, as a condition of the award, require the contractor to provide performance and other bonds. Group bank borrowing facilities and bank and surety bonding facilities are supported by cross-guarantees given by the Company and participating companies in the Group. The Company considers these to be insurance arrangements under IFRS 4 and accounts for them as such. In this respect, the guarantee contract is treated as a contingent liability until such time as it becomes probable that a payment under the guarantee will be required. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-247": { "value": "Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-248": { "value": "Dividends Dividends are recognised as distributions in the period in which they are declared. Dividends proposed but not declared are not recognised but are disclosed in note 11 to the financial statements. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-249": { "value": "Share-based payments These comprise equity-settled share-based compensation plans. Equity-settled share-based payments are measured at fair value at the date of grant and the fair value is expensed over the vesting period, based on the estimate of awards that will eventually vest. Fair value is measured using a Black- Scholes option pricing model. Where options over shares in the Company are granted to employees of subsidiaries, the Company recognises in its financial statements an increase in the cost of investment in its subsidiaries equivalent to the equity-settled share-based payment charge recognised in its subsidiaries\u2019 financial statements, with the corresponding credit being recognised directly in equity. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-250": { "value": "Retirement benefit obligations A defined benefit pension scheme is operated in the UK, which provides benefits based on pensionable salary. The details are included in note 21. The assets of the scheme are held separately from those of the Group. Pension scheme assets are measured using market values. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high-quality corporate bond of equivalent term and currency to the liability. The liability or asset recognised in the statement of financial position in respect of the defined benefit pension scheme is the difference between the present value of the defined benefit obligations and the fair value of scheme assets at the statement of financial position date. An asset is recognised because any surplus on the Costain Pension Scheme would be recoverable by way of a refund, as the Group has the unconditional right to any surplus once all the obligations of the Scheme have been settled. Administration costs of the scheme are recognised in the income statement. The interest income or cost on the scheme\u2019s net asset or liabilities is included in net finance expense. Remeasurements of the net asset or liability are recognised in the consolidated statement of comprehensive income. Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-251": { "value": "Financial assets and liabilities Financial assets and financial liabilities are recognised in the Group\u2019s statement of financial position when the Group becomes a party to the contractual provisions of the instrument. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-252": { "value": "(a) Financial assets The classification depends on the nature and purpose of the financial asset and is determined at the time of initial recognition. A financial asset is derecognised only when the contractual rights to the cash flows from that asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-253": { "value": "Trade and other receivables Trade and other receivables do not carry interest and are stated at amortised cost less loss allowances. Trade receivables mostly relate to long-term contracts. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-254": { "value": "Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. This policy applies to both the statement of financial position and the cash flow statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-255": { "value": "Impairment of financial assets Impairment of financial assets is based on an expected credit loss model applying the simplified approach permitted under IFRS 9. The Group calculates an allowance for credit losses based on the nature of the customer, experience of collecting receivables from similar customers and modelling default scenarios and applying probabilities of such scenarios. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-256": { "value": "(b) Financial liabilities Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. Financial liabilities are derecognised only when the obligations are discharged, cancelled or expire. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-257": { "value": "Trade and other payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-258": { "value": "(c) Derivative financial instruments Derivative financial instruments are used to manage risks arising from changes in foreign exchange rates and interest rates and are measured at their fair value as explained in the cash flow hedges section of note 18. Certain derivative financial instruments are designated as cash flow hedges in line with established risk management policies. These hedge exposure to variability in cash flows that is attributable to either a particular risk associated with a recognised asset or liability or a forecast transaction. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in equity, with any ineffective portion in the income statement. When hedged cash flows result in the recognition of a non-financial asset or liability, the associated gains or losses previously recognised in equity are included in the initial measurement of the asset or liability. For all other cash flow hedges, the gains or losses that are recognised in equity are transferred to the income statement in the same period in which the hedged cash flow affects the income statement. Hedge accounting is discontinued when the hedging instrument expires or is sold, is terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss previously recognised in equity is retained in equity until the hedged transaction occurs. If the hedged transaction is no longer expected to occur, the net cumulative gain or loss is transferred to the income statement. Any gains or losses arising from changes in fair value of derivative financial instruments not designated as hedges are recognised in the income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-259": { "value": "Fair value measurement When measuring the fair value of a financial or non-financial asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: \u2022 Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. \u2022 Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). \u2022 Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair valu hierarchy, then the fair value measurement is categorised in its entirety in the same level of the hierarchy as the lowest level input that is significant to the entire measurement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-260": { "value": "
Significant areas of judgement and estimation
The estimates and underlying assumptions used in the preparation of these financial statements are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision and future periods if the revision affects both current
and future periods.
The most critical accounting policies and significant areas of estimation and judgement arise from the accounting for long-
term contracts under IFRS 15 \u2018Revenue from Contracts with Customers\u2019, the carrying value of goodwill, the assumptions
used in the accounting for defined benefit pension schemes under IAS 19 \u2018Employee benefits\u2019, the recognition of deferred
tax assets in relation to tax losses and the items classified as other items and contract adjustments.
Long-term contracts
The majority of the Group\u2019s activities are undertaken via long-term contracts and IFRS 15 requires the identification and
separation of individual, distinct performance obligations, which are then accounted for individually. The most common
type of contracts undertaken by the Group with multiple performance obligations are framework contracts. In most
cases, the obligations are satisfied over time and estimates are made of the total contract costs and revenues. In many
cases, these obligations span more than one financial period. Both cost and revenue forecasts may be affected by a
number of uncertainties that depend on the outcome of future events and may need to be revised as events unfold and
uncertainties are resolved. Cost forecasts take into account the expectations of work to be undertaken on the contract.
Revenue forecasts take into account compensation events, variations and claims and assessments, for example, of the
impact of pain/gain arrangements to the extent that the amounts the Group expects to recover can be reliably estimated
and are highly probable not to reverse.
Management bases its estimates of costs and revenues and its assessment of the expected outcome of each long-
term contractual obligation on the latest available information. This includes detailed contract valuations, progress on
discussions over compensation events, variations and claims with customers, progress against the latest programme
for completing the works, forecasts of the costs to complete and, in certain cases, assessments of recoveries from
insurers, suppliers and contractors, where these are considered virtually certain. Revenue is recognised to the extent
that amounts forecast from compensation events, variations and claims are agreed or considered in management\u2019s
judgement highly probable to be agreed.
There are four material contracts where management has been required to make significant accounting estimates and,
which result in estimation uncertainty, as at 31 December 2022. In relation to these contracts, the Group has included
estimated recoveries with a combined value of \u00a312.2m, on the basis that these are considered highly probable not to
reverse. However, there are a range of factors which will affect the ultimate outcome once these contracts are finalised.
Management considers that the estimation uncertainty in relation to these four contracts ranges from a potential upside
of \u00a322.6m to a downside of \u00a312.2m.
The ultimate financial impact of this estimation uncertainty will depend, inter alia, on the terms of the contract and
the interaction with incentive arrangements, such as pain/gain mechanisms and bonus or KPI arrangements, as well as
final conclusions regarding claims and compensation events and assessments of, for example, costs disallowed under
the contract.
Significant areas of judgement and estimation continued
Long-term contracts continued
The estimates of the forecast contract outcome and the profit or loss earned to date are updated regularly and
significant changes are highlighted through established internal review procedures. The impact of any change in the
accounting estimates both positive and negative is then reflected in the financial statements.
While management believes it has recorded positions that are highly probable not to reverse on the basis of existing
facts and circumstances, there are uncertain factors which will impact the final contract outcome and could give rise to
material adjustments within the next financial year. Given the inherent complexity and pervasive impact of the various
judgements and estimates impacting revenue, cost of sales and related balance sheet amounts, it is not considered
plausible to quantify the impact of taking alternative assessments on each of these judgements.
Rectification provision: Contract in the water sector
In 2021, Costain recognised a provision of \u00a36.2m in respect of the estimated future costs of expected rectification works
required at a customer\u2019s water treatment facility where the Group had been prime contractor. During 2022, working with
designers, insurers and the customer, there is now greater clarity as to the scope and cost of rectification work required,
albeit a final solution has yet to be formally agreed with all relevant parties.
As at 31 December 2022, the Group\u2019s best estimate of the cost of the single most likely rectification solution is \u00a317.0m,
of which costs of \u00a34.8m have been incurred. Accordingly a provision of \u00a312.2m has been included in the statement of
financial position and disclosed in note 20. The work is expected to be concluded in 2024.
Whilst the cost of rectification work is capable of being estimated, a number of assumptions have had to be made in
arriving at the cost estimate. This, combined with the fact that the final design solution has not been finalised, results
in there being inherent estimation uncertainty in determining the ultimate cost and associated provision. Management
considers that the ultimate cost will fall within a range of \u00b130% of the estimated total cost of \u00a317m.
Costain has engaged with its insurers and received confirmation that insurance cover is available and that all reasonable
costs of rectification work that are validly incurred will be met by insurers. Consistent with this, insurers made an interim
payment on account during 2022. On this basis, management has made a judgement that the costs of rectification, after
deduction of insurers\u2019 excess and amounts already received from insurers, will be recovered. Accordingly, an insurance
receivable of \u00a313.4m has been recognised in the statement of financial position in accordance with IAS 37 on the basis
that recovery is considered virtually certain. There is a cap on insurance but the cap is significantly in excess of the cost
estimate. As at 31 December 2021, discussions with insurers were at an early stage and the expected recovery from
insurers was not recognised as a receivable on the basis that it could not be considered virtually certain.
Peterborough & Huntingdon
On 24 February 2022, Costain announced that it had reached a final settlement with National Grid regarding the
Peterborough & Huntingdon contract. The settlement agreement brought an end to the dispute after the contract
was mutually terminated in June 2020 and prevents any further claims under the contract. In 2022, Costain made a full
and final payment of \u00a343.4m to National Grid (which was fully provided for in 2021) and recognised a \u00a35.2m insurance
recovery. Also see note 3.
Carrying value of goodwill
Assessing the recoverability of the carrying value of goodwill recognised on acquisition requires an estimation of the
value in use of the cash generating units to which the goodwill has been allocated. These assessments involve estimation
and judgement, principally, in respect of the levels of operating margins, growth rates and future cash flows of the cash
generating units and also include consideration of the impact of potential sensitivities in respect of those assumptions.
The discount rates used to calculate present values and related sensitivities are set out in note 12.
Defined benefit pension scheme
Defined benefit pension schemes require significant estimates in relation to the assumptions for the discount rate, inflation
and member longevity that underpin the valuation. Each year in selecting the appropriate assumptions, the directors take
advice from an independent qualified actuary. The assumptions and resultant sensitivities are set out in note 21.
Deferred tax Included in deferred tax assets is an asset for tax losses recorded in current and prior years. The asset is recognised on the basis that the losses will be used against future taxable profits of the Group over the next five years. The significant judgement in assessing the recoverability relates to the ability of the Group to achieve its taxable profit forecasts and the ability to withstand the application of what the Board considers appropriate sensitivities. Details of deferred tax assets are shown in note 9. Adjusting items As described in this note, management has used judgement to determine the items classified as adjusting items and set out in note 3. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-261": { "value": "3 Reconciliation of reported revenue and operating profit/(loss) to adjusted revenue and operating profit Adjusted revenue, operating profit and earnings per share are presented as non-GAAP alternative performance measurements. 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. The revenue adjustments represent the reversal of the contract asset recorded in the statement of financial position immediately prior to the initial write down and any subsequent adjustment to overall contract revenue. Peterborough & Huntingdon During the year, a \u00a35.2m insurance receipt was recognised in relation to the Peterborough & Huntingdon contract outcome. In 2021, a \u00a343.4m provision was recognised in relation to the full and final settlement agreed with National Grid. Costain made a full and final payment of \u00a343.4m to National Grid in the first quarter of 2022. Related legal and other costs of \u00a34.2m were also incurred and expensed during the period ended 31 December 2021. These costs were recognised as adjusting items and therefore the related credit has also been treated as such. Other items During the year, Costain has embarked on a Transformation programme to deliver operational efficiencies. In 2022, the Group incurred \u00a35.0m (2021: \u00a3nil) of restructuring costs and \u00a30.7m (2021: \u00a3nil) of reorganisation costs. During the year, the Group sold a minor stake in a hotel company for \u00a30.5m. The investment was impaired to nil in 2020 reflecting the significant impact of COVID-19 in that sector, so the profit realised this year is also \u00a30.5m. This cost was recognised as an adjusting item and therefore the related profit has also been treated as such. During the year, the Group fully impaired tunnel boring machines held at net book value of \u00a31.4m which were outmoded and no longer core to operations. In 2022, the Group incurred \u00a3nil (2021: \u00a30.4m) amortisation on acquired intangibles as these are now carried at net book value \u00a3nil. In 2021, the Group also recognised a profit of \u00a38.4m on the A465 Heads of the Valley Road contract as a result of lower costs to complete than forecast at the end of 2020 when a write down to the contract asset was recognised. 3 Reconciliation of reported revenue and operating (loss)/profit to adjusted revenue and operating profit continued 2022 Adjusted \u00a3m P&H \u00a3m Other items \u00a3m Total \u00a3m Revenue 1,421.4 \u2013 \u2013 1,421.4 Cost of sales (1,328.7) \u2013 \u2013 (1,328.7) Gross profit 92.7 \u2013 \u2013 92.7 Administrative expenses before other items (56.4) \u2013 \u2013 (56.4) Other items: P&H insurance recovery \u2013 5.2 \u2013 5.2 Transformation costs \u2013 \u2013 (5.7) (5.7) Tunnel boring machines impairment \u2013 \u2013 (1.4) (1.4) Profit on disposal of other investment \u2013 \u2013 0.5 0.5 Administrative expenses (56.4) 5.2 (6.6) (57.8) Operating profit/(loss) 36.3 5.2 (6.6) 34.9 Share of results of joint ventures and associates \u2013 \u2013 \u2013 \u2013 Profit/(loss) from operations 36.3 5.2 (6.6) 34.9 Net finance expense (2.1) \u2013 \u2013 (2.1) Profit/(loss) before tax 34.2 5.2 (6.6) 32.8 Taxation (7.0) (1.0) 1.1 (6.9) Profit/(loss) for the year attributable to equity holders of the Parent 27.2 4.2 (5.5) 25.9 Basic earnings per share 9.9p 9.4p
Other
Adjusted P&H A465 items Total
2021 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue before contract adjustments
1,178.6
\u2013
\u2013
\u2013
1,178.6
Contract adjustments
\u2013
(43.4)
\u2013
(43.4)
Revenue
1,178.6
(43.4)
\u2013
\u2013
1,135.2
Cost of sales
(1,099.2)
(4.2)
8.4
\u2013
(1,095.0)
Gross profit/(loss)
79.4
(47.6)
8.4
\u2013
40.2
Administrative expenses before other items
(49.3)
\u2013
\u2013
\u2013
(49.3)
Amortisation of acquired intangible assets
\u2013
\u2013
\u2013
(0.4)
(0.4)
Administrative expenses
(49.3)
\u2013
\u2013
(0.4)
(49.7)
Operating profit/(loss)
30.1
(47.6)
8.4
(0.4)
(9.5)
Share of results of joint ventures and associates
\u2013
\u2013
\u2013
\u2013
\u2013
Profit/(loss) from operations
30.1
(47.6)
8.4
(0.4)
(9.5)
Net finance expense
(3.8)
\u2013
\u2013
\u2013
(3.8)
Profit/(loss) before tax
26.3
(47.6)
8.4
(0.4)
(13.3)
Taxation
0.1
9.0
(1.6)
\u2013
7.5
Profit/(loss) for the year attributable to equity holders of the Parent
26.4
(38.6)
6.8
(0.4)
(5.8)
Basic earnings/(loss) per share
9.6p
(2.1)p
", "dimensions": { "concept": "cost:DisclosureOfAdjustedRevenueAndOperatingProfitExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-264": { "value": "4 Operating segments The Group has two core business segments: Natural Resources and Transportation. The core segments are strategic business units with separate management and have different core customers or offer different services. This information is provided to the Chief Executive who is the chief operating decision maker. The segments are discussed in the Strategic Report section of these financial statements. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. The Group evaluates segment performance on the basis of profit or loss from operations before interest and tax expense and before other items and contract adjustments. The segment results that are reported to the Chief Executive include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Other items are allocated to the operating segments where appropriate, but otherwise are viewed as Central items . Intersegment sales and transfers are not material.
4 Operating segments continued
Natural
Resources Transportation Central costs Total
2022 \u00a3m \u00a3m \u00a3m \u00a3m
Segment revenue
Adjusted revenue
375.1
1,046.3
\u2013
1,421.4
Contract adjustments
\u2013
\u2013
\u2013
\u2013
Total revenue
375.1
1,046.3
\u2013
1,421.4
Segment profit/(loss)
Adjusted operating profit/(loss)
15.0
31.5
(10.2)
36.3
Contract adjustments
\u2013
\u2013
\u2013
\u2013
Operating profit/(loss) before other items
15.0
31.5
(10.2)
36.3
Share of results of joint ventures and associates
\u2013
\u2013
\u2013
\u2013
Profit/(loss) from operations before other items
15.0
31.5
(10.2)
36.3
Other items:
P&H insurance recovery
5.2
\u2013
\u2013
5.2
Transformation costs
(0.7)
\u2013
(5.0)
(5.7)
Tunnel boring machines impairment
\u2013
(1.4)
\u2013
(1.4)
Profit on disposal of other investment
\u2013
\u2013
0.5
0.5
Profit/(loss) from operations
19.5
30.1
(14.7)
34.9
Net finance expense
(2.1)
Profit before tax
32.8
Segment profit/(loss) is stated after charging the following:
Depreciation and impairment
2.4
8.9
\u2013
11.3
Amortisation and impairment
0.1
0.5
\u2013
0.6
Segment assets
Reportable segment assets
118.7
164.0
1.0
283.7
Unallocated assets:
Retirement benefit asset
60.2
Deferred tax
14.5
Cash and cash equivalents
123.8
Total assets
482.2
Expenditure on non-current assets
Property, plant and equipment
3.4
13.6
\u2013
17.0
Intangible assets
\u2013
0.3
\u2013
0.3
Segment liabilities
Reportable segment liabilities
69.7
157.3
43.8
270.8
Unallocated liabilities:
Taxation
0.2
Total liabilities
271.0
4 Operating segments continued Geographical information Segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets and exclude deferred tax assets. All revenue originates in the UK (2021: all) and all non-current assets are located in the UK (2021: all).
Natural
Resources Transportation Central costs Total
2021 \u00a3m \u00a3m \u00a3m \u00a3m
Segment revenue
Adjusted revenue
314.4
864.2
\u2013
1,178.6
Contract adjustments
(43.4)
\u2013
\u2013
(43.4)
Total revenue
271.0
864.2
\u2013
1,135.2
Segment profit/(loss)
Adjusted operating profit/(loss)
(2.6)
41.4
(8.7)
30.1
Contract adjustments
(47.6)
8.4
\u2013
(39.2)
Operating (loss)/profit before other items
(50.2)
49.8
(8.7)
(9.1)
Share of results of joint ventures and associates
\u2013
\u2013
\u2013
\u2013
(Loss)/profit from operations before other items
(50.2)
49.8
(8.7)
(9.1)
Amortisation of acquired intangible assets
(0.4)
\u2013
\u2013
(0.4)
(Loss)/profit from operations
(50.6)
49.8
(8.7)
(9.5)
Net finance expense
(3.8)
Loss before tax
(13.3)
Segment profit/(loss) is stated after charging the following:
Depreciation and impairment
3.4
9.5
\u2013
12.9
Amortisation and impairment (including acquired intangible assets)
0.6
0.5
\u2013
1.1
Segment assets
Reportable segment assets
111.8
178.4
0.1
290.3
Unallocated assets:
Retirement benefit asset
67.1
Deferred tax
15.4
Taxation
0.2
Cash and cash equivalents
159.4
Total assets
532.4
Expenditure on non-current assets
Property, plant and equipment
4.3
14.4
\u2013
18.7
Intangible assets
0.7
0.8
\u2013
1.5
Segment liabilities
Reportable segment liabilities
100.7
183.0
10.3
294.0
Unallocated liabilities:
Borrowings
39.4
Total liabilities
333.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-265": { "value": "The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. The Group evaluates segment performance on the basis of profit or loss from operations before interest and tax expense and before other items and contract adjustments. The segment results that are reported to the Chief Executive include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Other items are allocated to the operating segments where appropriate, but otherwise are viewed as Central items ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-266": { "value": "Customers accounting for more than 10% of revenue Two customers (2021: two) in the transportation sector accounted for revenue of \u00a3853.0m (2021: \u00a3629.0m). ", "dimensions": { "concept": "ifrs-full:DisclosureOfSegmentsMajorCustomersExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-267": { "value": "
5 Other operating expenses and income
2022 2021
\u00a3m \u00a3m
Profit/(loss) before tax is stated after charging:
Amortisation and impairment of intangible assets (note 12)
0.6
1.1
Depreciation and impairment of property, plant and equipment (note 13)
11.3
12.9
Transformation costs (note 3)
5.7
\u2013
Expenses relating to short-term leases and leases of low value assets
62.4
41.3
and after crediting:
RDEC grant income
5.5
3.0
P&H insurance recovery (note 3)
5.2
\u2013
Profit on disposal of other investment (notes 3 and 26)
0.5
\u2013
Short-term leases mostly relate to the hiring of plant for operations on construction sites.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-268": { "value": "Auditors\u2019 remuneration 2022 2021 \u00a3m \u00a3m Fees payable to the Group\u2019s auditors for the audit of the annual financial statements 0.1 0.1 Fees payable to the Group\u2019s auditors in respect of: Audit of financial statements of subsidiaries of the Company 1.0 1.0 1.1 1.1 An amount of \u00a30.2m (2021: \u00a30.1m) was paid to the Group\u2019s auditors in 2022 for the independent review of the interim results and other non-audit services. Amounts paid to the Company\u2019s auditors in respect of services to the Company, other than the audit of the Company\u2019s financial statements, have not been disclosed as the information is required instead to be disclosed on a consolidated basis. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-269": { "value": "6 Employee benefit expense 2022 2021 Group \u00a3m \u00a3m Wages and salaries 230.4 200.3 Social security costs 26.4 21.4 Other pension costs \u2013 defined contribution schemes (note 21) 11.7 10.4 Share-based payments expense (note 21) 1.1 1.1 269.6 233.2 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 \u00a311.9m, comprising \u00a313.2 included in operating costs less \u00a31.3m interest income included in net finance expense (2021: \u00a311.7m, comprising \u00a311.7m in operating costs and \u00a3nil interest income included in net finance expense). Defined benefit scheme The defined benefit scheme was closed to new members on 31 May 2005 and from 1 April 2006, future benefits were calculated on a Career Average Revalued Earnings basis. The scheme was closed to future accrual of benefits to members on 30 September 2009. A full actuarial valuation of the scheme was carried out as at 31 March 2022 and this was updated to 31 December 2022 by a qualified independent actuary. At 31 December 2022, there were 2,867 retirees and 2,529 deferred members (2021: 2,875 retirees and 2,629 deferred members). The weighted average duration of the obligations is 11.9 years (2021: 16.3 years). 2022 2021 2020 \u00a3m \u00a3m \u00a3m Present value of defined benefit obligations (527.1) (837.5) (886.5) Fair value of scheme assets 587.3 904.6 880.9 Recognised asset/(liability) for defined benefit obligations 60.2 67.1 (5.6) Movements in present value of defined benefit obligations 2022 2021 \u00a3m \u00a3m At 1 January 837.5 886.5 Interest cost 14.8 11.7 Remeasurements \u2013 demographic assumptions (0.3) (5.4) Remeasurements \u2013 financial assumptions (321.4) (16.1) Remeasurements \u2013 experience adjustments 29.7 (6.5) Benefits paid (33.2) (32.7) At 31 December 527.1 837. 5 Movements in fair value of scheme assets 2022 2021 \u00a3m \u00a3m At 1 January 904.6 880.9 Interest income 16.1 11.7 Remeasurements \u2013 return on assets (310.7) 34.6 Contributions by employer 10.8 10.4 Administrative expenses (0.3) (0.3) Benefits paid (33.2) (32.7) At 31 December 587.3 904.6 Expense recognised in the income statement 2022 2021 \u00a3m \u00a3m Administrative expenses paid by the pension scheme (0.3) (0.3) Administrative expenses paid directly by the Group (1.2) (1.0) Interest income on the net assets of the defined benefit pension scheme 1.3 \u2013 (0.2) (1.3 2022 2021 Fair value of scheme assets \u00a3m \u00a3m Global equities 109.8 137. 2 Multi-asset growth funds 56.1 133.7 Multi-credit fund 110.9 118.1 LDI plus collateral 307.2 494.6 Property \u2013 4.4 Cash 3.3 16.6 587.3 904.6 All equities are quoted securities. The multi-asset growth funds comprise portfolios of quoted and unquoted investments. The multi-credit fund invests in a portfolio of primarily floating rate debt of non-investment grade or unrated borrowers. The Liability Driven Investments (LDI) portfolio comprises gilts, repos and swaps and is supported by a liquid absolute return fund providing collateral. Quoted equities are valued at the prevailing bid, offer or middle market stock exchange or over-the-counter market prices. In the multi-asset growth funds, the fair values of the underlying unquoted assets are determined by the fund managers using quoted prices for similar assets or other valuation techniques where all the inputs are directly observable or indirectly observable from market data. The loans in the multi-credit fund may be priced either using quotes from a pricing vendor (if available), a broker or at a level determined by the investment manager that is agreed with the fund. The LDI fund is valued using a unit price calculated for the fund based on the net asset value of the underlying assets. The property investment was held within a limited partnership and was valued by the general partner in accordance with RICS valuation standards. The pension scheme does not have any assets invested in the Group\u2019s financial instruments or in property or other assets used by the Group. 21 Employee benefits continued Pensions continued Principal actuarial assumptions (expressed as weighted averages) 2022 2021 2020 % % % Discount rate 5.00 1.80 1.35 Future pension increases 2.90 3.25 2.85 Inflation assumption 3.10 3.40 2.95 Weighted average life expectancies from age 65, as per mortality tables, used to determine benefits at 31 December 2022 and 31 December 2021 are: 2022 2021 Male Female Male Female (years) (years) (years) (years) Currently aged 65 21.9 23.9 22.1 24.0 Non-retirees currently aged 45 22.9 25.1 23.1 25.3 The discount rate, inflation and pension increase and mortality assumptions have a significant effect on the amounts reported. Changes in these assumptions would have the following effects on the defined benefit scheme: Pension liability Pension cost \u00a3m \u00a3m Increasing the discount rate by 0.25%, decreases pension liability and increases pension income/reduces pension cost by Decreasing inflation by 0.25% (which decreases pension increases), decreases pension 15.4 0.8 liability and increases pension income/reduces pension cost by Increasing life expectancy by one year, increases pension liability and reduces pension 13.5 0.7 income/increases pension cost by 17.9 0.9 As highlighted in the table above, the defined benefit scheme exposes the Group to actuarial risks such as longevity, interest rate, inflation and investment risks. The LDI portfolio is designed to respond to changes in gilt yields in a similar way to a fixed proportion of the liabilities. With the LDI portfolio, if gilt yields fall, the value of the investments will rise to help partially match the increase in the trustee valuation of the liabilities arising from a fall in the gilt yield based discount rate. Similarly, if gilt yields rise, the value of the matching asset portfolio will fall, as will the valuation of the liabilities because of an increase in the discount rate. The leverage within the LDI portfolio means the equivalent of 95% of the value of the assets is sensitive to changes in interest rates and inflation and this mitigates the equivalent movement in the liabilities of the scheme as a whole. In 2022, long-term government bond yields increased significantly which meant that the value of the LDI portfolio fell but the value of the liabilities also fell by a similar amount. In accordance with the pension regulations, a triennial actuarial review of the Costain defined benefit pension scheme as at 31 March 2022 was started in 2022. Discussions around the results of the review are currently in progress and the Trustee/Company have until 30 June 2023 to complete the review. The last triennial actuarial review was completed in March 2020 and the valuation and updated deficit recovery plan were agreed with the Scheme Trustee resulting in cash contributions of \u00a310.2m for each year commencing 1 April 2020 (increasing annually with inflation) until the deficit is cleared, which would be in 2029 on the basis of the assumptions made in the 2019 valuation and agreed recovery plan. In addition, as previously implemented, the Group will continue to make an additional contribution so that the total deficit contributions match the total dividend amount paid by the Company each year. Any additional payments in this regard would have the effect of reducing the recovery period in the agreed plan. The Group will also pay the expenses of administration in the next financial year. Any surplus of deficit contributions to the Costain Pension Scheme would be recoverable by way of a refund, as the Group has the unconditional right to any surplus once all the obligations of the Scheme have been settled. Accordingly, the Group does not expect to have to make provision for these additional contributions arising from this agreement in future accounts. Defined contribution schemes Two defined contribution pensions schemes are operated. The total expense relating to these plans was \u00a311.7m (2021: \u00a310.4m). ", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-270": { "value": "2022 2021 Number Number Average number of persons employed Natural Resources 1,718 1,549 Transportation 1,787 1,741 Central 20 21 3,525 3,311 Of the above employees one was employed overseas (2021: one). Company The Company does not employ any personnel, except for the directors considered in note 7", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-271": { "value": "7 Remuneration of directors Details of the directors\u2019 remuneration, pension entitlements, interest in the Long-Term Incentive Plans, Annual Incentive Plans, Deferred Share Bonus Plans and share options are included in the Directors\u2019 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 2022 and 2021 are detailed below. 2022 2021 \u00a3m \u00a3m Remuneration 1.9 1.2 Post-employment benefits 0.1 \u2013 2.0 1.2 Transactions with key management personnel Disclosures related to the remuneration of key management personnel as defined in IAS 24 \u2018Related Party Disclosures\u2019 are given in below. Key management personnel, as defined under IAS 24 \u2018Related Party Disclosures\u2019, have been identified as the Board of directors, as the controls operated by the Group ensure that all key decisions are reserved for the Board. As at 13 March 2023, the date of signing of this report, the Directors of the Company and their immediate relatives control 360,067 ordinary shares in Costain Group PLC, which expressed as a percentage of the issued share capital is 0.13% (2021: 0.15%) of the voting shares of the Company. In addition, Mr Bishoy Azmy, non-independent, non-executive director is the director representative of the shareholder ASGC which holds 41,666,666 shares and is a c.15% shareholder of the Company. Bishoy Azmy held no shares in his own name. In addition to their salaries, in respect of the executive directors and executive officers, the Group provides non- cash benefits and contributes to defined contribution pension plans. Executive Directors and executive officers also participate in the Group\u2019s LTIP, DSBP, AIP and SAYE plans, which are detailed in note 21. The compensation of key management personnel, including the directors, is as follows: Group 2022 2021 \u00a3m \u00a3m Directors\u2019 emoluments 1.9 1.2 Executive officers\u2019 emoluments 2.1 1.5 Post-employment benefits 0.1 \u2013 Termination benefits 0.6 \u2013 Share-based payments 0.8 0.6 5.5 3.3 The above amounts are included in employee benefit expense (note 6). ", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-272": { "value": "8 Net finance expense 2022 2021 \u00a3m \u00a3m Interest income from bank deposits 0.5 0.1 Interest income on the net assets of the defined benefit pension scheme (note 21) 1.3 \u2013 Finance income 1.8 0.1 Interest payable on interest bearing bank loans, borrowings and other similar charges (2.7) (3.0) Interest expense on lease liabilities (1.2) (0.9) Finance expense (3.9) (3.9) Net finance expense (2.1) (3.8) Other similar charges includes arrangement and commitment fees payable. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-273": { "value": "9 Taxation 2022 2021 \u00a3m \u00a3m On profit/(loss) for the year UK corporation tax at 19% (2021: 19%) (4.6) \u2013 Adjustment in respect of prior years 0.3 0.1 Current tax (charge)/credit for the year (4.3) 0.1 Deferred tax (charge)/credit for the current year (2.5) 8.4 Adjustment in respect of prior years (0.1) (1.0) Deferred tax (charge)/credit for the year (2.6) 7.4 Tax (charge)/credit in the consolidated income statement (6.9) 7.5 2022 2021 \u00a3m \u00a3m Tax reconciliation Profit/(loss) before tax 32.8 (13.3) Taxation at 19% (2021: 19%) (6.2) 2.5 Amounts qualifying for tax relief and disallowed expenses (1.0) (0.3) Rate adjustment relating to UK deferred taxation 0.1 6.2 Adjustments in respect of prior years 0.2 (0.9) Tax (charge)/credit in the consolidated income statement (6.9) 7.5 Effective rate of tax 21.0% 56.4% The tax above does not include any amounts for equity accounted joint ventures and associates, whose results are disclosed in the consolidated income statement net of tax. The current tax liability of \u00a30.2m (2021: asset of \u00a30.2m) for the Group and liability of \u00a31.2m (2021: \u00a31.6m) for the Company represent the amount of tax in respect of all outstanding periods and include the Group\u2019s best estimate of an y assets and liabilities, where appropriate. 2022 2021 \u00a3m \u00a3m Tax in other comprehensive income Current tax \u2013 Retirement benefit assets 2.2 \u2013 Deferred tax \u2013 Retirement benefit assets 1.7 (15.6) Tax credit/(charge) in other comprehensive income 3.9 (15.6) Factors that may affect future tax charges In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate would increase to 25%. This rate was substantively enacted on 24th May 2021. Deferred tax balances in these financial statements have ", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-274": { "value": "2022 2021 \u00a3m \u00a3m Deferred tax asset recognised Accelerated capital allowances 2.1 0.8 Short-term temporary differences 3.2 2.7 Retirement benefit assets (15.0) (16.7) Tax losses 24.2 28.6 Deferred tax asset 14.5 15.4 Deferred tax assets have been calculated at the rate of 25% (2021: 25%) or at 19% where the asset will unwind prior to April 2023. Deferred tax assets have been recognised in respect of accumulated tax trading losses in the UK of \u00a398.3m (2021: \u00a3119.5m). The deferred tax assets include an amount of \u00a324.2m (2021: \u00a328.6m) which relates to these carried forward tax losses. These have been recognised to the extent it is expected that they will be recoverable within five years (2021: six years) using the estimated future taxable income based on the approved forecasts for the Group and reasonably likely estimated future profits. These losses can be carried forward indefinitely and have no expiry date. The Company has no deferred tax asset (2021: \u00a31.0m) relating to short-term temporary differences. 2022 2021 \u00a3m \u00a3m Analysis of deferred tax movements At 1 January 15.4 23.6 Deferred tax in consolidated income statement Accelerated capital allowances 1.3 (0.3) Short-term temporary differences 0.5 1.2 Retirement benefit assets \u2013 (2.2) Tax losses (4.4) 8.7 (2.6) 7.4 Deferred tax in other comprehensive income Retirement benefit assets 1.7 (15.6) At 31 December 14.5 15.4 Deferred tax balances in these financial statements have been calculated at the rate of 25% or at 19% where the asset will unwind prior to April 2023. 9 Taxation continued Deferred tax assets not recognised The Group and Company have deferred tax assets in their UK operations that have not been recognised at the year-end on the basis that their future economic benefits were not assured at the statement of financial position date. The following gross value items are available as deferred tax assets: Group Company 2022 2021 2022 2021 \u00a3m \u00a3m \u00a3m \u00a3m Management expenses and charges incurred by Parent Company 54.7 54.7 54.7 54.7 Capital losses 270.6 270.6 241.0 241.0 The current year tax effect, at 19% or 25% after April 2023, of claiming short-term temporary differences and trading tax losses was \u00a3nil (2021: \u00a3nil ) as shown in the tax reconciliation above. There are no expiry dates associated with the deferred tax assets not recognised. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-275": { "value": "10 Earnings/(loss) per share The calculation of earnings/(loss) per share is based on profit of \u00a325.9m (2021: loss of \u00a35.8m) and the number of shares set out below. 2022 2021 Number Number (millions) (millions) Weighted average number of ordinary shares in issue for basic earnings per share calculation 275.0 274.9 Dilutive potential ordinary shares arising from employee share schemes 1.7 5.1 Weighted average number of ordinary shares in issue for diluted earnings per share calculation 276.7 280.0 At 31 December 2022, nil options were excluded from the weighted average number of ordinary shares calculation because they were anti-dilutive (2021: nil options were excluded). ", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-276": { "value": "11 Dividends No dividends were paid or recommended in respect of the year ended 31 December 2022. The Board of directors\u2019 current policy for dividends is described in note 18 a) Capital management. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-277": { "value": "12 Intangible assets Other Customer acquired Other Goodwill relationships intangibles intangibles Total Group \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Cost At 1 January 2021 54.1 15.4 9.7 14.4 93.6 Additions \u2013 \u2013 \u2013 1.5 1.5 At 31 December 2021 54.1 15.4 9.7 15.9 95.1 At 1 January 2022 54.1 15.4 9.7 15.9 95.1 Additions \u2013 \u2013 \u2013 0.3 0.3 At 31 December 2022 54.1 15.4 9.7 16.2 95.4 Accumulated amortisation and impairment At 1 January 2021 9.0 15.0 9.7 7.8 41.5 Charge in year \u2013 0.4 \u2013 0.7 1.1 At 31 December 2021 9.0 15.4 9.7 8.5 42.6 At 1 January 2022 9.0 15.4 9.7 8.5 42.6 Charge in year \u2013 \u2013 \u2013 0.6 0.6 At 31 December 2022 9.0 15.4 9.7 9.1 43.2 Net book value At 31 December 2022 45.1 \u2013 \u2013 7.1 52.2 At 31 December 2021 45.1 \u2013 \u2013 7.4 52.5 At 1 January 2021 45.1 0.4 \u2013 6.6 52.1 The amortisation charges for the year are included in administration expenses. Other intangibles includes development expenditure of \u00a36.1m (2021: \u00a36.1m) primarily relating to a project in the rail sector. Goodwill has been allocated to the applicable cash generating units of the Transportation segment (\u00a315.5m (2021: \u00a315.5m)) and the Natural Resources segment (\u00a329.6m (2021: \u00a329.6m)). As described in note 2, the Group reviews the value of goodwill and in the absence of any identified impairment risks, tests are based on internal value in use calculations of the cash generating unit (CGU). The key assumptions for these calculations are: operating margins, discount rates and growth rates. Discount rates have been estimated based on pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The rate used to discount the forecast cash flows for both the Transportation and Natural Resources CGUs was 15.5%. In 2021, the discount rates used for the two CGUs were Transportation 13.2% and Natural Resources 14.3%. 12 Intangible assets continued The value in use calculations use the Group\u2019s four-year cash flow forecasts, which are based on the expected revenues and profitability of each CGU, taking into account the current level of secured and anticipated orders, extrapolated for future years by the expected growth applicable to each CGU, as follows: 2022 2022 2021 2021 Transportation Natural Resources Transportation Natural Resources Growth rates % % % % Year 5 1.5 1.5 1.9 1.9 Long-term average 1.5 1.5 1.9 1.9 At 31 December 2022, based on the internal value in use calculations, management concluded that the recoverable value of the Transportation cash generating unit exceeded its carrying amount with substantial headroom. At 31 December 2022, based on the internal value in use calculations, which included a sensitivity aligned to a 30% reduction in absolute business unit operating profit, management concluded that the recoverable amount of the Natural Resources cash generating unit exceeded its carrying amount, with headroom of \u00a332.1m. The recoverable amount of the Natural Resources goodwill therefore continues to be subject to further sensitivities and changes in the value in use assessment assumptions would have resulted in the following changes: \u2022 An increase in the discount rate of 1.0% (from 15.5% to 16.5% pre-tax), reduces headroom by \u00a37.9m; \u2022 A decrease in the long-term growth rate of 1.0% (from 1.5% to 0.5%), reduces headroom by \u00a35.8m; and \u2022 A further reduction in CGU operating profit by an additional 20%, on top of the 30% reduction already modelled, reduces headroom by \u00a319.3m. Based on the above sensitivities the directors consider that there is no reasonable possible change in any key assumption that, in isolation, would result in an impairment of goodwill. However, if the sensitivities modelled above were to occur in combination, this would give rise to an impairment. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-278": { "value": "13 Property, plant and equipment Right-of-use assets Land and Plant and Land and Vehicles, plant buildings equipment buildings and equipment Total Group \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Cost At 1 January 2021 0.6 27.0 20.5 30.3 78.4 Additions \u2013 0.7 1.0 17.0 18.7 Disposals \u2013 (0.7) (7.4) (17.9) (26.0) At 31 December 2021 0.6 27.0 14.1 29.4 71.1 At 1 January 2022 0.6 27.0 14.1 29.4 71.1 Additions \u2013 0.2 0.7 16.1 17.0 Disposals (0.6) (2.6) (1.4) (14.2) (18.8) At 31 December 2022 \u2013 24.6 13.4 31.3 69.3 Accumulated depreciation and impairment At 1 January 2021 0.6 19.8 8.4 9.7 38.5 Charge in year \u2013 2.5 3.3 7.1 12.9 Disposals \u2013 (0.7) (5.6) (6.0) (12.3) At 31 December 2021 0.6 21.6 6.1 10.8 39.1 At 1 January 2022 0.6 21.6 6.1 10.8 39.1 Charge in year \u2013 2.9 2 .1 4.9 9.9 Impairment in year \u2013 1.4 \u2013 \u2013 1.4 Disposals (0.6) (2.6) (0.6) (3.9) (7.7) At 31 December 2022 \u2013 23.3 7.6 11.8 42.7 Net book value At 31 December 2022 \u2013 1.3 5.8 19.5 26.6 At 31 December 2021 \u2013 5.4 8.0 18.6 32.0 At 1 January 2021 \u2013 7.2 12.1 20.6 39.9 The depreciation charges for the year are included in administration expenses. ", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-279": { "value": "Leased assets Other amounts recognised in the income statement: 2022 2021 \u00a3m \u00a3m Interest expense (included in finance expense) 1.2 0.9 Expense relating to short-term leases (included in cost of sales and administrative expenses) 62.4 41.3 The lease liabilities relating to these right-of-use assets are as follows: 2022 2021 \u00a3m \u00a3m Current 9.1 8.6 Non-current 15.0 18.2 24 .1 26.8 ", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-280": { "value": "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 2022. 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 Compan has assessed the probability of loss under these guarantees as remote.
The equity capital of the above are held by subsidiary undertakings with the exception of Richard Costain Ltd and
Costain Engineering & Construction Limited.
All undertakings operate mainly in the country of incorporation. See key to registered office/principal place of business
at the bottom of this note.
All holdings are of ordinary shares.
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, associates, joint ventures and joint arrangements is required:
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
(8)
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 Abu Dhabi Co WLL
Dormant
49
(9)
Costain Alcaidesa Limited
Holding Company
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
(15)
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
(16)
Costain Oil, Gas & Process (Overseas) Limited
Dormant
100
(1)
Costain Process Construction Limited
Dormant
100
(1)
JBCC Rhead PTE Limited
Dormant
100
(12)
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)
* Denotes that the entity has taken the audit exemption under Section 479A of the Companies Act 2006 for the financial year ended 31 December 2022.
Costain Abu Dhabi Co WLL has been treated as a subsidiary undertaking due to Costain having power to influence and control the composition of the Board of directors and the beneficial right to all the net income. Dormant status means no or a very small number of transactions with activity winding down. Key to registered office/principal place of business (1) Costain House, Vanwall Business Park, Maidenhead, Berkshire, SL6 4UB, England (2) 56 Carden Place, Aberdeen, AB10 1UP, Scotland (5) The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 (New Castle County), USA (8) P.O.Box N-7768, Bank Lane, Nassau, Bahamas (9) Dormant company \u2013 Abu Dhabi, UAE, no record of address (12) Peninsula Plaza #27\u201301, 111 North Bridge Road, 179098, Singapore (15) Dormant company \u2013 Venezuela, no record of address (16) Dormant company \u2013 Nigeria, no record of address
24 Subsidiary undertakings, joint ventures, associates and joint operations
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)
Costain Upstream Limited
Engineering and Design Services
100
(2)
Richard Costain Limited
Service Company
100
(1)
Percentage of
Registered
office/principal
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-281": { "value": "
Investments in joint ventures
\u00a3m
Cost
At 1 January 2021
14.4
At 31 December 2021
14.4
At 1 January 2022
14.4
Additions
6.5
At 31 December 2022
20.9
Share of post-acquisition reserves
At 1 January 2021
(14.0)
At 31 December 2021
(14.0)
At 1 January 2022
(14.0)
At 31 December 2022
(14.0)
Impairment
At 1 January 2021
\u2013
At 31 December 2021
\u2013
At 1 January 2022
\u2013
Impairment in year
(6.5)
At 31 December 2022
(6.5)
Net book value
At 31 December 2022
0.4
At 31 December 2021
0.4
At 1 January 2021
0.4
During the year, Costain acquired \u00a36.5m of shares in an existing joint venture, ABC Electrification Ltd. In order to
facilitate the settlement of the joint venture\u2019s net liabilities, consideration for these shares included a \u00a33.4m cash
payment and the write down of an existing \u00a33.1m receivable owed to the Group by the joint venture. On the basis of the
financial position of ABC Electrification Ltd, the Group does not expect to recover this equity investment and accordingly
has booked an impairment charge of \u00a36.5m. This charge has been offset against a corresponding payable previously
held in respect of these joint venture losses, in accordance with IAS 28 paragraph 39. Therefore, there has been no net
impact on the consolidated income statement in the year.
Analysis of Group share of revenue, income and assets and liabilities of joint ventures
2022
2021
Joint ventures Joint ventures
\u00a3m \u00a3m
Revenue
(0.8)
(4.1)
Profit before tax
\u2013
\u2013
Taxation
\u2013
\u2013
Profit for the year
\u2013
\u2013
Non-current assets
\u2013
\u2013
Trade and other receivables
6.1
6.0
Cash and cash equivalents
(0.1)
(0.1)
Trade and other payables \u2013 current
(5.6)
(5.5)
Non-current liabilities
\u2013
\u2013
Investments in joint ventures and associates
0.4
0.4
Dividends received by Group
\u2013
\u2013
Net interest payable by joint ventures in 2022 was \u00a3nil (2021: \u00a3nil). There was no (2021: no) interest income and interest expense during the year. At the year-end, there were no capital or financial commitments entered into by the joint ventures (2021: none).
Analysis of the total revenue, income, assets and liabilities of joint ventures
2022
2021
Joint ventures Joint ventures
\u00a3m \u00a3m
Revenue
(1.9)
(12.1)
Profit before tax
\u2013
\u2013
Taxation
\u2013
\u2013
Profit for the year
\u2013
\u2013
Non-current assets
\u2013
\u2013
Trade and other receivables
17.4
17. 3
Cash and cash equivalents
(0.3)
(0.3)
Trade and other payables \u2013 current
(16.1)
(16.1)
Non-current liabilities
\u2013
\u2013
Equity
1.0
0.9
There is no other comprehensive income/(expense) in respect of joint ventures or associates.
Registered
Percentage of office/principal
Status equity held place 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
(14)
China Harbour-Costain Mexico S de RL de CV
Dormant
50
(13)
Gravitas Offshore Limited
Dormant
45
(6)
Jalal Costain WLL
Dormant
49
(10)
Nesma-Costain Process Co. Limited
Dormant
50
(11)
(3) 210 Pentonville Road, London, N1 9JY, England (4) Booths Park, Chelford Road, Knutsford, WA16 8QZ, England (6) Whitehill House, Windmill Hill Business Park, Whitehill Way, Swindon, SN5 6PE, England (7) 8th Floor, The Place, High Holborn, London, WC1V 7AA, England (10) Flat 33, Building 232, Road 18, Block 321, Manama, Bahrain (11) P.O.Box 6967 21 452, Jeddah, Saudi Arabia (13) Calle Delfines No. 268 \u2013 2, Frac. Playa Ensenada, Ensenada, B.C., CP. 22880, Mexico (14) Marsza\u0142kowska 82, Warsaw, Mazowieckie, 00\u2013517, Poland
Activity \u00a3m equity held
place of business
Reporting date
Principal joint ventures
ABC Electrification Ltd
Rail Electrification
19.6
33.3
(7)
31 March
4Delivery Limited
Civil Engineering
\u2013
40
(3)
31 March
Issued share capital Percentage of Registered office/principal ", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-282": { "value": "Contract liabilities result when cumulative cash received exceeds cumulative revenue on any particular contract. On contracts undertaken by the Group, this typically results from work being undertaken, or on framework contracts awarded, in a different order to the programme envisaged in the contractual payments schedule. There are no significant one-off factors outside of normal trading contributing to the decrease in contract liabilities. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-283": { "value": "16 Trade and other receivables Group Company 2022 2021 \u00a3m \u00a3m Amounts included in current assets Trade receivables 98.3 120.0 Other receivables 6.8 4.5 Contract assets 50.8 39.9 Prepayments and accrued income 31.3 34.5 Amounts owed by joint ventures and associates 0.2 0.7 Amounts owed by subsidiary undertakings \u2013 \u2013 187.4 199.6 Amounts included in non-current assets Other receivables 3.5 5.5 2022 \u00a3m 2021 \u00a3m At 31 December 2022, contract assets falling due within one year include retentions of \u00a33.1m (2021: \u00a31.8m) relating to long-term contracts in progress. Other receivables falling due after more than one year include retentions of \u00a33.4m (2021: \u00a35.5m) relating to long-term contracts in progress. The average credit period within trade receivables on amounts billed for construction work and on sales of goods is 32 days (2021: 31 days). The analysis of the due dates of the trade receivables was \u00a391.3m (2021: \u00a3115.8m) due within 30 days, \u00a33.3m (2021: \u00a31.7m) due between 30 and 60 days and \u00a33.7m (2021: \u00a32.5m) due after 60 days. An analysis of trade receivables that are beyond their due dates is shown in note 18. In respect of the Company, amounts due from subsidiary undertakings are repayable on demand and may be interest-bearing. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-284": { "value": "17 Cash, loans and borrowings Cash and cash equivalents Cash and cash equivalents are analysed below, and include the Group\u2019s share of cash held by joint operations of \u00a356.5 (2021: \u00a358.1m). Group Company 2022 2021 \u00a3m \u00a3m Cash and cash equivalents 123.8 159.4 Cash and cash equivalents in the cash flow statement 123.8 159.4 2022 \u00a3m 2021 \u00a3m ", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-285": { "value": "Interest-bearing loans and borrowings Group Company 2022 2021 \u00a3m \u00a3m Current Term Loan \u2013 7.4 \u2013 7.4 Non-current Term Loan \u2013 32.0 \u2013 32.0 2022 \u00a3m 2021 \u00a3m The Group repaid the Term Loan during the year (2021: the Term Loan was stated after associated arrangement fees of \u00a30.6m, classified within one year, which were being amortised over the period of the facility). The Group\u2019s borrowings facilities are described in note 18. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-286": { "value": "Cash flow information Net cash/(debt) reconciliation This section sets out an analysis of net cash/(debt) and movements in net cash/(debt) during the year. Group Company 2022 2021 \u00a3m \u00a3m Cash and cash equivalents 123.8 159.4 Borrowings \u2013 current \u2013 (7.4) Borrowings \u2013 non-current \u2013 (32.0) Net cash before lease liabilities 123.8 120.0 Lease liabilities (note 13) (24.1) (26.8) Net cash 99.7 93.2 2022 \u00a3m 2021 \u00a3m Cash and cash Borrowings \u2013 Borrowings \u2013 Lease equivalents current non-current liabilities Total Group \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Net cash/(debt) at 1 January 2021 150.9 ( 7. 2) (39.6) (33.3) 70.8 Cash flows 8.5 (0.2) 7.6 10.8 26.7 New leases \u2013 \u2013 \u2013 (18.0) (18.0) Disposal of leases \u2013 \u2013 \u2013 13.7 13.7 Interest expense \u2013 \u2013 \u2013 (0.9) (0.9) Interest payments (presented as operating cash flows) \u2013 \u2013 \u2013 0.9 0.9 Net cash/(debt) at 31 December 2021 159.4 (7.4) (32.0) (26.8) 93.2 Net cash/(debt) at 1 January 2022 159.4 (7.4) (32.0) (26.8) 93.2 Cash flows (35.6) 7.4 32.0 8.4 12.2 New leases \u2013 \u2013 \u2013 (16.8) (16.8) Disposal of leases \u2013 \u2013 \u2013 11.1 11.1 Interest expense \u2013 \u2013 \u2013 (1.2) (1.2) Interest payments (presented as operating cash flows) \u2013 \u2013 \u2013 1.2 1.2 Net cash/(debt) at 31 December 2022 123.8 \u2013 \u2013 (2 4.1) 99.7 ", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-287": { "value": "18 Financial instruments \u2013 Fair values and risk management Risk management The Group\u2019s centralised treasury function manages financial risk, principally arising from liquidity and funding risks and movements in foreign currency rates and interest rates, for all companies within the Group in accordance with policies agreed by the directors. Neither the Company nor the Group enters into speculative transactions. a) Capital management The objective of the Group\u2019s strategy is to deliver long-term sustainable value to shareholders while maintaining a balanced approach to investment in the business for growth, maintaining a strong balance sheet and returns to shareholders. Costain is targeting a dividend cover of around three times adjusted earnings, taking into account the free cash flow generated in the period. The Group recognises the importance of dividends to shareholders and remains committed to returning to dividend payments when appropriate. The Board has concluded that the priorities, and best returns, for the Company\u2019s capital, over the next financial year, are to invest in organic opportunities and to build further the Company\u2019s capital base and therefore does not recommend a final dividend this year
18 Financial instruments \u2013 Fair values and risk management continued
Risk management continued
b) Liquidity and funding risk
Ultimate responsibility for liquidity and funding risk rests with the Board, which has put in place a monitoring and
reporting framework to manage funding requirements.
Liquidity risk is managed by monitoring actual and forecast short and medium-term cash flows and the maturity profile
of financial assets and liabilities and by maintaining adequate cash reserves and bank facilities. The nature and timing of
the contract cash flows causes the cash balances to vary over the month with the balance usually highest at month-end.
The average month-end net cash balance during the year was \u00a3101.9m (2021: \u00a3106.7m).
Customers awarding long-term contracting work may, as a condition of the award, require the contractor to provide
performance and other bonds. Consequently, the Group is reliant on its ability to source bank and surety bonds. It
has facilities in place to provide these bonds and monitors the usage and regularly updates the forecast usage of
these facilities.
At 31 December 2022, the Group had banking and bonding facilities, including a \u00a3125.0m Revolving Credit Facility,
extending to 24 September 2024 (2021: \u00a3131.0m, extending to September 2023). At 31 December 2021, the Group
also had a \u00a340.0m Term Loan, which was repaid during 2022. The unsecured facilities have financial covenants based
on interest cover, leverage and liquidity measured quarterly. The covenants are based on accounting standards already
in force at the date of signing the facilities and any subsequent agreements. The Group complied with all covenants in
2022. The unsecured bonding facilities are set out below:
Group and Company
2022 2021
\u00a3m \u00a3m
Expiring between one and five years
280.0
310.0
Element of above facilities available for borrowings
\u2013
2.5
At 31 December 2022, the utilisation of these bonding facilities amounted to \u00a388.8m (2021: \u00a3100.7m).
c) Credit risk
The Group focuses on major blue-chip private sector and large public sector customers. In respect of contracts with
other customers, the Group uses an external credit scoring system to assess a potential customer\u2019s credit quality
and considers the timing and amounts of progress payments and will enter into a contract only if these assessments
are satisfactory.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared cred it
risk characteristics and the days past due. Group 1 comprises major blue-chip private sector and large public sector
customers. Group 2 includes smaller customers and receivables arising from various additional services undertaken as
requirements of some of the maintenance contracts. Revenue of \u00a31,412.1m (2021: \u00a31,123.0m) was attributable to Group 1
customers and \u00a39.3m (2021: \u00a312.2m) attributable to Group 2 customers.
The contract assets relate to unbilled work in progress and have substantially the same credit risk characteristics as
the trade receivables for the same types of contracts. The Group has concluded that the expected loss rates for trade
receivables are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors that
might affect the ability of the customers to settle the receivables.
18 Financial instruments \u2013 Fair values and risk management continued Risk management continued d) Interest rate risk The Group has cash balances and bank facilities in the UK, mostly denominated in pounds sterling. The Group previously had interest rate swap arrangements that fixed the effective LIBOR interest rate on \u00a350.0m of pounds sterling borrowings up to June 2021. The Group repaid the Term Loan during the year and therefore, at the year-end, interest rate risk is negligible. e) Foreign currency risk Transactional currency exposures arise from sales or purchases by operating companies in currencies other than their functional currency. The current strategy is to hedge both committed and forecast foreign currency exposures, where applicable, and where the transaction timing and amount can be determined reliably and no natural hedge exists. The Group only enters into forward contracts when a contractual commitment exists in respect of the foreign currency transaction and the Group\u2019s policy is to negotiate the terms of the hedge derivative to match the terms of the hedged item to maximise hedge effectiveness. The Group\u2019s treasury function evaluates and hedges foreign currency risks, in close cooperation with the responsible operational management team. Cash flow hedges Forward currency contracts that hedge forecast transactions are classified as cash flow hedges and stated at fair value based on a Level 2 valuation method, using quoted forward exchange rates. The terms of the foreign currency contracts match the terms of the commitments. Interest rate swaps are classified as cash flow hedges and stated at fair value based on a Level 2 valuation method using yield curves derived from prevailing market interest rates. At 31 December 2022, the Group had less than \u00a30.1m of cash flow hedges (2021: as summarised below). The carrying value represents the fair value of the contract; the contractual cash flows represent the pounds sterling commitments.
2022
2021
Between Between
Carrying Contractual Within one one and Carrying Contractual Within one one and
amount cash flows year five years amount cash flows year five years
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign exchange contracts:
Purchases
\u2013
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
\u2013
Sales
\u2013
\u2013
\u2013
\u2013
\u2013
1.0
1.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.8
0.8
\u2013
Interest rate swaps
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
0.8
0.8
\u2013
The carrying amount of hedge instruments is included in trade and other receivables or trade and other payables. The expected impact on the income statement of the foreign exchange contracts is \u00a3nil in 2023.
The movements on the hedging reserve by classification are set out below.
Interest Total hedge
rate swaps reserves
\u00a3m \u00a3m
At 1 January 2021
(0.3)
(0.3)
Change in fair value of hedging instrument recognised in OCI for the year
\u2013
\u2013
Reclassified from OCI to profit or loss
0.3
0.3
At 31 December 2021
\u2013
\u2013
At 1 January 2022
\u2013
\u2013
At 31 December 2022
\u2013
\u2013
The Company does not have any forward foreign currency contracts or other derivatives. Financial assets and liabilities The Group has grouped its financial instruments into \u2018classes\u2019. Although IFRS 7 does not define \u2018classes\u2019, as a minimum instruments measured at amortised cost should be distinguished from instruments measured at fair value.
a) Currency and maturity of financial assets
Financial assets not measured at fair value
2022
2021
Between Between
Within one and After five Within one and After five
Total one year five years years Total one year five years years
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cash and cash equivalents:
pounds sterling
123.2
123.2
\u2013
\u2013
158.8
158.8
\u2013
\u2013
other
0.6
0.6
\u2013
\u2013
0.6
0.6
\u2013
\u2013
123.8
123.8
\u2013
\u2013
159.4
159.4
\u2013
\u2013
Trade, other receivables and amounts
owed by joint ventures and associates:
pounds sterling
108.8
105.3
3.5
\u2013
130.7
125.2
5.5
\u2013
Insurance recovery asset:
pounds sterling
13.4
9.4
4.0
\u2013
\u2013
\u2013
\u2013
\u2013
122.2
114.7
7.5
\u2013
130.7
125.2
5.5
\u2013
Total financial assets
not measured at fair value
246.0
238.5
7.5
\u2013
290.1
284.6
5.5
\u2013
The Group has not disclosed the fair values for short-term trade receivables and amounts due from joint ventures and associates within financial assets, because their carrying amounts are a reasonable approximation of fair values. Financial assets measured at fair value The Group measures its currency forwards and interest rate swaps at fair value (see above) but does not have any other financial assets measured at fair value. 18 Financial instruments \u2013 Fair values and risk management continued Financial assets and liabilities continued
b) Currency and maturity of financial liabilities
Financial liabilities not measured at fair value
2022
2021
Between Between
Within one and Within one and
Total one year five years Total one year five years
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term Loan \u2013 pounds sterling
\u2013
\u2013
\u2013
39.4
7.4
32.0
Lease liabilities \u2013 pounds sterling
24 .1
9.1
15.0
26.8
8.6
18.2
Trade and other payables \u2013 pounds sterling
140.6
139.5
1.1
116.0
114.2
1.8
Total financial liabilities not measured at fair value
164.7
148.6
16.1
182.2
130.2
52.0
The Group has not disclosed the fair values for short-term trade and other payables and bank loans within financial liabilities, because their carrying amounts are a reasonable approximation of fair values. Lease liabilities are carried at the present value of the minimum lease payments. The expected undiscounted lease payments on long-term and high value leased assets included in the IFRS 16 discounted liability are within one year \u00a312.4m (2021: \u00a39.2m), two to five years \u00a324.6m (2021: \u00a316.3m) and over five years \u00a33.2m (2021: \u00a33.8m). There are no financial liabilities carried at fair value. The Company has issued financial guarantees relating to performance of contracts signed by its subsidiaries, which could be called upon on demand if the subsidiary fails to perform under the contract. However, the value of these guarantees is difficult to quantify, and they have never been called. The 2021 Annual Report and Accounts incorrectly reported that a guarantee in relation to the Peterborough & Huntingdon contract had been utilised.
c) Reconciliation of trade and other receivables and trade and other payables to the statement of financial position
2022
2021
Current Non-current Current Non-current
\u00a3m \u00a3m \u00a3m \u00a3m
Trade and other receivables (as above)
114.7
7.5
125.2
5.5
Contract assets
50.8
\u2013
39.9
\u2013
Prepayments and accrued income
31.3
\u2013
34.5
\u2013
196.8
7.5
199.6
5.5
2022
2021
Current Non-current Current Non-current
\u00a3m \u00a3m \u00a3m \u00a3m
Trade and other payables (as above)
139.5
1.1
114.2
1.8
Contract liabilities
1.4
\u2013
10.7
\u2013
Accruals and deferred income
91.6
\u2013
90.2
\u2013
232.5
1.1
215.1
1.8
d) Effective interest rates of financial assets and liabilities
2022
2021
Financial assets
Cash and cash equivalents
0.0% to 3.4%
0.0% to 0.3%
Financial liabilities The Group repaid the Term Loan during the year (2021: \u00a339.4m (net of fees) was outstanding at the year-end). The Group also has a \u00a3125.0m (2021: \u00a3131.0) Revolving Credit Facility (RCF) of which \u00a3nil (2021: \u00a3nil) was drawn at the year-end. These loans are unsecured and carry interest at floating rates at a margin over SONIA (2021: over LIBOR). The Company\u2019s financial assets comprised cash at bank of \u00a30.1m (2021: \u00a375.0m) denominated in pounds sterling, either on demand or with a maturity of up to three months, and trade and other receivables of \u00a369.4m (2021: \u00a371.9m) denominated in pounds sterling and maturing within one year. The Company\u2019s financial liabilities comprise trade and other payables of \u00a326.5m denominated in pounds sterling (2021: \u00a326.4m and the \u00a339.4m (net of fees) Term Loan denominated in pounds sterling). All liabilities mature within one year (2021: the Term Loan matured between one and five years). Measurement of fair value Valuation techniques and significant unobservable inputs The following tables show the valuation techniques used in measuring Level 2 fair values, as well as the significant unobservable inputs used. There are no financial instruments whose fair value could be determined under Level 1 or 3.
Financial instruments measured at fair value
Inter relationship between
Significant significant unobservable inputs
Type
Valuation technique
unobservable inputs and fair value measurement
Cash flow hedges
Market comparison technique: The fair values are based
Not applicable.
Not applicable.
on broker quotes. Similar contracts are traded in an
active market and quotes reflect the actual transactions
in similar instruments. Interest rate swaps are measured
by discounting the related cash flows using yield curves
derived from prevailing market interest rates.
Financial instruments not measured at fair value
Type
Valuation technique
Significant unobservable inputs
Other financial liabilities (as above)
Discounted cash flow.
Not applicable.
Term Loan
Discounted cash flow.
Not applicable.
On this basis, the loss allowance as at 31 December 2022 and 31 December 2021 was determined as follows for both
trade receivables and contract assets:
Less than 60 to 120 days More than 120 days
Current 60 days past due past due
past due
Total
31 December 2022
Group 1
Expected loss rate
0.00%
0.10%
0.25%
0.50%
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade receivables
94.3
2 .1
0.7
0.2
97.3
Contract assets
34.0
15.2
1.3
0.2
50.8
Loss allowance
\u2013
\u2013
\u2013
\u2013
\u2013
Group 2
Expected loss rate
1.0%
2.0%
15.0%
30.0%
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade receivables
0.7
0.2
\u2013
0.1
1.0
Contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
Loss allowance
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2021
Group 1
Expected loss rate
0.00%
0.10%
0.25%
0.50%
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade receivables
114.6
2.8
1.0
1.1
119.5
Contract assets
19.2
8.2
4.2
8.3
39.9
Loss allowance
\u2013
\u2013
\u2013
\u2013
\u2013
Group 2
Expected loss rate
1.0%
2.0%
15.0%
30.0%
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trade receivables
0.4
0.1
\u2013
\u2013
0.5
Contract assets
\u2013
\u2013
\u2013
\u2013
\u2013
Loss allowance
\u2013
\u2013
\u2013
\u2013
\u2013
Impairment losses on trade receivables and contract assets are included within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item. The total provision for impairment of trade and other receivables is \u00a30.3m (2021: \u00a30.3m). The credit risk in contract assets is not material. Deposits in the UK are placed with the bank facility providers or, in joint operations, with banks agreed by the partners, provided that bank has a long-term credit rating above BBB-. Transactions involving derivative financial instruments are with bank or insurance company counterparties with high credit ratings that are monitored regularly and with whom there are signed netting agreements. Given the high credit ratings of the banks and insurance companies used, management does not expect any counterparty will fail to meet its obligations. At the year-end date, excluding UK Government bodies, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amounts of each financial asset, including derivative financial instruments, and the individual constituents of contract assets in the statement of financial position. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-288": { "value": "Risk management The Group\u2019s centralised treasury function manages financial risk, principally arising from liquidity and funding risks and movements in foreign currency rates and interest rates, for all companies within the Group in accordance with policies agreed by the directors. Neither the Company nor the Group enters into speculative transactions. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-289": { "value": "a) Capital management The objective of the Group\u2019s strategy is to deliver long-term sustainable value to shareholders while maintaining a balanced approach to investment in the business for growth, maintaining a strong balance sheet and returns to shareholders. Costain is targeting a dividend cover of around three times adjusted earnings, taking into account the free cash flow generated in the period. The Group recognises the importance of dividends to shareholders and remains committed to returning to dividend payments when appropriate. The Board has concluded that the priorities, and best returns, for the Company\u2019s capital, over the next financial year, are to invest in organic opportunities and to build further the Company\u2019s capital base and therefore does not recommend a final dividend this year . ", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-290": { "value": "Risk management continued b) Liquidity and funding risk Ultimate responsibility for liquidity and funding risk rests with the Board, which has put in place a monitoring and reporting framework to manage funding requirements. Liquidity risk is managed by monitoring actual and forecast short and medium-term cash flows and the maturity profile of financial assets and liabilities and by maintaining adequate cash reserves and bank facilities. The nature and timing of the contract cash flows causes the cash balances to vary over the month with the balance usually highest at month-end. The average month-end net cash balance during the year was \u00a3101.9m (2021: \u00a3106.7m). Customers awarding long-term contracting work may, as a condition of the award, require the contractor to provide performance and other bonds. Consequently, the Group is reliant on its ability to source bank and surety bonds. It has facilities in place to provide these bonds and monitors the usage and regularly updates the forecast usage of these facilities. At 31 December 2022, the Group had banking and bonding facilities, including a \u00a3125.0m Revolving Credit Facility, extending to 24 September 2024 (2021: \u00a3131.0m, extending to September 2023). At 31 December 2021, the Group also had a \u00a340.0m Term Loan, which was repaid during 2022. The unsecured facilities have financial covenants based on interest cover, leverage and liquidity measured quarterly. The covenants are based on accounting standards already in force at the date of signing the facilities and any subsequent agreements. The Group complied with all covenants in2022. The unsecured bonding facilities are set out below: Group and Company 2022 2021 \u00a3m \u00a3m Expiring between one and five years 280.0 310.0 Element of above facilities available for borrowings \u2013 2.5 At 31 December 2022, the utilisation of these bonding facilities amounted to \u00a388.8m (2021: \u00a3100.7m). ", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-291": { "value": "c) Credit risk The Group focuses on major blue-chip private sector and large public sector customers. In respect of contracts with other customers, the Group uses an external credit scoring system to assess a potential customer\u2019s credit quality and considers the timing and amounts of progress payments and will enter into a contract only if these assessments are satisfactory. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared cred it risk characteristics and the days past due. Group 1 comprises major blue-chip private sector and large public sector customers. Group 2 includes smaller customers and receivables arising from various additional services undertaken as requirements of some of the maintenance contracts. Revenue of \u00a31,412.1m (2021: \u00a31,123.0m) was attributable to Group 1 customers and \u00a39.3m (2021: \u00a312.2m) attributable to Group 2 customers. The contract assets relate to unbilled work in progress and have substantially the same credit risk characteristics as the trade receivables for the same types of contracts. The Group has concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. The expected loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors that might affect the ability of the customers to settle the receivables. The credit risk in contract assets is not material. Deposits in the UK are placed with the bank facility providers or, in joint operations, with banks agreed by the partners, provided that bank has a long-term credit rating above BBB-. Transactions involving derivative financial instruments are with bank or insurance company counterparties with high credit ratings that are monitored regularly and with whom there are signed netting agreements. Given the high credit ratings of the banks and insurance companies used, management does not expect any counterparty will fail to meet its obligations. At the year-end date, excluding UK Government bodies, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amounts of each financial asset, including derivative financial instruments, and the individual constituents of contract assets in the statement of financial position. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-292": { "value": "On this basis, the loss allowance as at 31 December 2022 and 31 December 2021 was determined as follows for both trade receivables and contract assets: Less than 60 to 120 days More than 120 days Current 60 days past due past due past due Total 31 December 2022 Group 1 Expected loss rate 0.00% 0.10% 0.25% 0.50% \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Trade receivables 94.3 2 .1 0.7 0.2 97.3 Contract assets 34.0 15.2 1.3 0.2 50.8 Loss allowance \u2013 \u2013 \u2013 \u2013 \u2013 Group 2 Expected loss rate 1.0% 2.0% 15.0% 30.0% \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Trade receivables 0.7 0.2 \u2013 0.1 1.0 Contract assets \u2013 \u2013 \u2013 \u2013 \u2013 Loss allowance \u2013 \u2013 \u2013 \u2013 \u2013 31 December 2021 Group 1 Expected loss rate 0.00% 0.10% 0.25% 0.50% \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Trade receivables 114.6 2.8 1.0 1.1 119.5 Contract assets 19.2 8.2 4.2 8.3 39.9 Loss allowance \u2013 \u2013 \u2013 \u2013 \u2013 Group 2 Expected loss rate 1.0% 2.0% 15.0% 30.0% \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Trade receivables 0.4 0.1 \u2013 \u2013 0.5 Contract assets \u2013 \u2013 \u2013 \u2013 \u2013 Loss allowance \u2013 \u2013 \u2013 \u2013 \u2013 Impairment losses on trade receivables and contract assets are included within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item. The total provision for impairment of trade and other receivables is \u00a30.3m (2021: \u00a30.3m). The credit risk in contract assets is not material. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-293": { "value": "Measurement of fair value Valuation techniques and significant unobservable inputs The following tables show the valuation techniques used in measuring Level 2 fair values, as well as the significant unobservable inputs used. There are no financial instruments whose fair value could be determined under Level 1 or 3. Financial instruments measured at fair value Inter relationship between Significant significant unobservable inputs Type Valuation technique unobservable inputs and fair value measurement Cash flow hedges Market comparison technique: The fair values are based Not applicable. Not applicable. on broker quotes. Similar contracts are traded in an active market and quotes reflect the actual transactions in similar instruments. Interest rate swaps are measured by discounting the related cash flows using yield curves derived from prevailing market interest rates. Financial instruments not measured at fair value Type Valuation technique Significant unobservable inputs Other financial liabilities (as above) Discounted cash flow. Not applicable. Term Loan Discounted cash flow. Not applicable. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-294": { "value": "19 Trade and other payables Group Company 2022 2021 \u00a3m \u00a3m Current liabilities Trade payables 97.5 83.0 Other payables 33.4 23.2 Social security 7.9 7. 6 Contract liabilities 1.4 10.7 Accruals and deferred income 91.6 90.2 Amounts owed to joint ventures and associates 0.7 0.4 Amounts owed to subsidiary undertakings \u2013 \u2013 232.5 215.1 Non-current liabilities Other payables 1.1 1.8 1.1 1.8 2022 \u00a3m 2021 \u00a3m Accruals and deferred income include subcontract liabilities (not yet payable), subcontract retentions and other accruals and deferred income. The amounts included in contract liabilities and in deferred income at 31 December 2021 have all been recognised in the income statement in the year. 19 Trade and other payables continued Other payables primarily includes the VAT liability. The directors consider that the carrying amount of trade payables, other payables, social security and amounts owed to joint ventures and associates approximates to their fair value. Financial risk management policies are in place that seek to ensure that all payables are paid within their credit timeframes. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-295": { "value": "20 Provisions for other liabilities and charges Rectification Onerous provision contract Other Total Group \u00a3m \u00a3m \u00a3m \u00a3m Current At 1 January 2021 \u2013 \u2013 0.6 0.6 Provided 6.2 43.4 0.5 50.1 Utilised \u2013 \u2013 (0.4) (0.4) At 31 December 2021 6.2 43.4 0.7 50.3 At 1 January 2022 6.2 43.4 0.7 50.3 Provided 7.1 \u2013 0.6 7.7 Utilised (4.8) (43.4) (0.4) (48.6) At 31 December 2022 8.5 \u2013 0.9 9.4 Non-current At 1 January 2021 \u2013 \u2013 \u2013 \u2013 At 31 December 2021 \u2013 \u2013 \u2013 \u2013 At 1 January 2022 \u2013 \u2013 \u2013 \u2013 Provided 3.7 \u2013 \u2013 3.7 At 31 December 2022 3.7 \u2013 \u2013 3.7 Group Rectification provision: Contract in the water sector In 2021, Costain recognised a provision of \u00a36.2m in respect of the estimated future costs of expected rectification works required at a customer\u2019s water treatment facility where the Group had been prime contractor. During 2022, working with designers, insurers and the customer, there is now greater clarity as to the scope and cost of rectification work required, albeit a final solution has yet to be formally agreed with all relevant parties. As at 31 December 2022, the Group\u2019s best estimate of the cost of the single most likely rectification solution is \u00a317.0m, of which costs of \u00a34.8m have been incurred. Accordingly a provision of \u00a312.2m has been included in the statement of financial position and disclosed in the table above. The work is expected to be concluded in 2024. Costain has engaged with its insurers and received confirmation that insurance cover is available and that all reasonable costs of rectification work that are validly incurred will be met by insurers. Consistent with this, insurers made an interim payment on account during 2022. Accordingly, an insurance receivable of \u00a313.4m has been recognised in the statement of financial position in accordance with IAS 37 on the basis that recovery is considered virtually certain. There is a cap on insurance but the cap is significantly in excess of the cost estimate. As at 31 December 2021, discussions with insurers were at an early stage and the expected recovery from insurers was not recognised as a receivable on the basis that it could not be considered virtually certain. Whilst the cost provision is management\u2019s best estimate, the final solution is yet to be agreed and cost estimates finalised. It is therefore reasonably foreseeable that adjustments to the amounts recognised as a provision may be required. However, given the relationship between the insurance policy and the liability, management does not consider that any increase in the cost of the rectification works will result in a material impact to the Group\u2019s financial position. Further information on estimates and judgements made in relation to this provision are given in note 2. Other provisions, mainly comprise insurance provisions and provisions for remedial costs, most of which are expected to be used over the next year. ", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-296": { "value": "Share-based payments The Company operates a number of share-based payment plans as described below. Long-Term Incentive Plans (LTIP) Shareholders approved a Long-Term Incentive Plan at the 2014 AGM that allows for conditional awards with a maximum face value of up to 100% of base salary to be awarded. Performance conditions, such as those based on earnings per share, are determined by the Remuneration Committee of the Board at the time of grant. Annual Incentive Plan (AIP) Executive directors and other senior management are eligible to participate in the Company\u2019s Annual Incentive Plan, under which one third of the award is payable in shares. The total AIP award of up to 150% of base salary has performance conditions based on adjusted EBIT (earnings before interest, tax and other items) (at least 50% of the award) and other measures. The share award element vests on the second anniversary of the date of grant and will be satisfied by shares purchased by a trust on behalf of the Group. It will not lead to any dilution of shareholder interest. Participants must be in employment with the Company and not under notice of termination (either given or received) on the date of vesting. Deferred Share Bonus Plan (DSBP) Prior to 2014, executive directors and other senior management were eligible to participate in the Company\u2019s Deferred Share Bonus Plan which allowed for conditional awards with a face value of up to 50% of base salary with a performance condition based on adjusted EBIT (earnings before interest, tax and other items). The deferred bonus award was satisfied by shares purchased by a trust on behalf of the Group, so did not dilute shareholder interests. The last grant under the DSBP was made in 2014 and vested on 31 March 2016 and the last transactions completed in 2020. Save As You Earn Scheme (SAYE) The Company operates a SAYE scheme that is open to all eligible employees who pay a fixed amount from salary into a savings account each month and elect to save over three years. At the end of the savings period, employees have six months in which to exercise their options using the funds saved (after which the options expire). If employees decide not to exercise their options, they may withdraw the funds saved. Exercise of options is subject to continued employment within the Group (except where permitted by the rules of the scheme). Share-based payment expense The amounts recognised in the income statement, before tax, for share-based payment transactions with employees was \u00a31.1m (2021: \u00a31.1m); the entire charge relates to subsidiaries. 21 Employee benefits continued Share-based payments continued Options outstanding at the end of the year The movements in the outstanding LTIPs (nil-cost option), AIP (nil-cost option) and DSBPs (nil-cost option), which arrange for the grant of shares to executive directors and senior management, and the outstanding SAYE schemes are shown below. LTIP DSBP AIP SAYE Weighted average Number Number Number Number exercise price (m) (m) (m) (m) (p) Outstanding at 1 January 2021 3.8 \u2013 0.4 2.1 229.5 Forfeited during the year (1.0) \u2013 \u2013 (0.8) 286.3 Exercised during the year (0.2) \u2013 (0.2) \u2013 \u2013 Granted during the year 2.9 \u2013 \u2013 \u2013 \u2013 Outstanding at 31 December 2021 5.5 \u2013 0.2 1.3 191.9 Outstanding at 1 January 2022 5.5 \u2013 0.2 1.3 191.9 Forfeited during the year (2.3) \u2013 \u2013 (0.5) 278.7 Exercised during the year \u2013 \u2013 (0.1) \u2013 \u2013 Granted during the year 9.3 \u2013 2.2 \u2013 \u2013 Outstanding at 31 December 2022 12.5 \u2013 2.3 0.8 118.4 Exercisable at the end of the period 0.1 \u2013 0.1 0.7 118.4 Share options outstanding at the end of the year had a weighted average remaining contractual life of 4.6 years (2021: 4.2 years). The fair value of options granted is calculated using the Black-Scholes option pricing model. The aggregate fair value ofoptions granted during the year was \u00a33.6m (2021: \u00a31.7m). The assumptions used in valuing the grants were: 2022 2021 Expected volatility 20% 20% Expected life (years) 3.0 3.0 Risk-free interest rate 1.2% 1.2% Expected dividend yield 0.0% 0.0% The expected volatility is based on the historical share price volatility over a term matching the expected life. The expected life is based on management\u2019s best estimate having regard to the effect of non-transferability, exercise restrictions and behavioural considerations. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-297": { "value": "22 Share capital 2022 2021 Number Nominal value Number Nominal value (millions) \u00a3m (millions) \u00a3m Issued share capital Shares in issue at beginning of year \u2013 ordinary shares of 50p each, fully paid 275.0 137.5 275.0 137. 5 Issued in year (see below) 0.1 \u2013 \u2013 Shares in issue at end of year \u2013 ordinary shares of 50p each, fully paid 275.1 137.5 275.0 137.5 The Company\u2019s issued share capital comprised 275,084,741 ordinary shares of 50 pence each as at 31 December 2022. All shares rank pari passu regarding entitlement to capital and dividends. In the year, no dividends were paid and, therefore, no shares were issued under the Scrip Dividend Scheme. No options were exercised under the SAYE schemes in the year as all options were \u2018underwater\u2019 so the Company issued nil shares in respect of SAYE. The 2019 LTIP vested in the year and 135,000 shares were issued in May 2022 to satisfy this vesting. The share options outstanding at the year-end are detailed in note 21. Details of the performance conditions and the options granted to executive directors are given in the Directors\u2019 Remuneration report. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-298": { "value": "23 Contingent liabilities Group Group bank borrowing facilities and bank and surety bonding facilities are supported by cross-guarantees given by the Company and participating companies in the Group. There are contingent liabilities in respect of: \u2022 performance bonds and other undertakings entered into in the ordinary course of business; and \u2022 legal claims arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from the contingent liabilities other than those provided. ", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-299": { "value": "
Percentage Country of
Activity interest business
Major joint operations
A-one+ Joint Venture \u2013 ASC area 12 \u2013 Highways England
Engineering and Maintenance
33.3
UK
CH2M-Costain Joint Venture \u2013 Area 14 M&R contract
Engineering and Maintenance
50
UK
Costain-Atkins-Black & Veatch Joint Venture \u2013 Thames Water AMP6
Engineering
70
UK
Costain-CH2M UK \u2013 ESCC JV \u2013 East Sussex highway maintenance
Engineering and Maintenance
50
UK
Costain-Galliford Try Joint Venture \u2013 M1 smart motorways
Civil Engineering
70
UK
Costain-MWH Joint Venture \u2013 Southern Water AMP6
Civil Engineering
50
UK
Costain-Skanska \u2013 HS2 Enabling works
Civil Engineering
50
UK
Costain-Skanska Joint Venture \u2013 A14 Cambridge to Huntingdon
Civil Engineering
50
UK
Improvement Scheme
Costain-Skanska Joint Venture \u2013 Balfour Beatty Joint Venture \u2013 A14
Civil Engineering
33.3
UK
CVB Joint Venture \u2013 Thames Tideway Tunnel East
Civil Engineering
40
UK
Skanska-Costain-Strabag S1 Joint Venture \u2013 HS2 Main Works
Rail Engineering
34
UK
Skanska-Costain-Strabag S2 Joint Venture \u2013 HS2 Main Works
Rail Engineering
34
UK
The ASP Batch Joint Venture \u2013 Severn Trent \u2013 Large capital schemes
Engineering
33.3
UK
outside AMP6
Percentage Country of
Activity interest business
Other joint operations, including completed
ACTUS Joint Venture \u2013 Trawsfynydd nuclear power station Civil Engineering
25
UK
active waste retrieval
Alstom-Babcock-Costain Joint Venture \u2013 Edinburgh to Glasgow Rail Engineering
33.3
UK
Rail Improvement Programme
Alstom-Costain C644 Joint Venture \u2013 Traction power \u2013 Crossrail
Rail Engineering
32.5
UK
Alstom-Costain C650 Joint Venture \u2013 HV power supply \u2013 Crossrail
Rail Engineering
32.5
UK
Amec-Costain-Jacobs Joint Venture \u2013 Magnox ILW Civil Engineering
33.3
UK
Management Programme
A-one+ Integrated Highway Services \u2013 MAC 7
Engineering and Maintenance
33.3
UK
A-one+ Integrated Highway Services \u2013 MAC 10
Engineering and Maintenance
25
UK
A-one+ Integrated Highway Services \u2013 MAC 12
Engineering and Maintenance
33.3
UK
A-one+ Integrated Highway Services \u2013 MAC 14
Engineering and Maintenance
33.3
UK
A-one+ Joint Venture \u2013 ASC area 4 \u2013 Highways England
Engineering and Maintenance
33.3
UK
ATC Joint Venture \u2013 C610 \u2013 Crossrail
Rail Engineering
32.5
UK
ATC Joint Venture \u2013 C695 \u2013 Crossrail
Rail Engineering
32.5
UK
Balfour Beatty-BmJV-Carillion-Costain Joint Venture \u2013
Civil Engineering
29
UK
National Major Projects \u2013 Highways England
CosMott Joint Venture \u2013 Devonport Major Infrastructure
Consultancy
50
UK
Programme \u2013 Construction Delivery Partner
Costain Arup Joint Venture \u2013 Yorkshire Water
Consultancy
50
UK
Costain-Dalekovod Joint Venture \u2013 National Grid HV Overhead
Engineering
60
UK
Line System
Costain-Hochtief Joint Venture \u2013 Reading station
Civil Engineering
50
UK
Costain-Lafarge Joint Venture \u2013 East and South East Framework
Civil Engineering
50
UK
Costain-Lafarge Joint Venture \u2013 Midlands Framework
Civil Engineering
50
UK
Costain-Laing O'Rourke Joint Venture \u2013 Bond Street station
Civil Engineering
50
UK
Costain-Laing O\u2019Rourke Joint Venture \u2013 Farringdon station
Civil Engineering
50
UK
Percentage Country of
Activity interest business
Other joint operations, including completed continued
Costain-Skanska C336 Joint Venture \u2013 Paddington New Yard \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska C360 Joint Venture \u2013 Eleanor Street \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska C405 Joint Venture \u2013 Paddington \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska C411 Joint Venture \u2013 Bond Street \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska C412 Joint Venture \u2013 Bond Street \u2013 Crossrail
Civil Engineering
50
UK
Costain-Skanska Joint Venture \u2013 A14 Ellington to Fen Ditton
Civil Engineering
50
UK
Costain-Skanska Joint Venture \u2013 Crossrail Civils Framework Enabling Works
Civil Engineering
50
UK
Costain-Skanska Joint Venture \u2013 NGT Tunnels, London
Civil Engineering
52.6
UK
Costain-Skanska Joint Venture \u2013 Paddington Station Bakerloo Line Link Project
Civil Engineering
50
UK
Costain-Taylor Woodrow Joint Venture \u2013 King's Cross re-development & Phase II
Civil Engineering
50
UK
Northern works
Costain-Vinci Construction Joint Venture \u2013 Shieldhall
Civil Engineering
50
UK
Costain-Vinci Joint Venture \u2013 M4 corridor around Newport
Civil Engineering
50
UK
Costain-VWS Joint Venture \u2013 Mersey Valley Processing Centre
Engineering
50
UK
(Shell Green) Extension Project Stage 2
Educo UK Joint Venture \u2013 Bradford Schools
Building
50
UK
Galliford-Costain-Atkins Joint Venture \u2013 United Utilities
Engineering
42.5
UK
Lagan-Ferrovial-Costain \u2013 A8
Civil Engineering
45
UK
The e5 Joint Alliance Severn Trent Framework
Engineering
25
UK
TSIF-ILW Joint Venture \u2013 Trawsfynydd nuclear power station decommissioning
Civil Engineering
33.3
UK
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-300": { "value": "25 Related party transactions Group Related party relationships exist with subsidiaries, joint ventures and associates, joint operations, The Costain Pension Scheme and with directors and executive officers. Sales of goods and services 2022 2021 Joint ventures Joint Joint ventures Joint and associates operations Total and associates operations Total \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Services of Group employees 0.6 81.2 81.8 0.4 81.4 81.8 Construction services and materials \u2013 17. 2 17. 2 \u2013 17.3 17. 3 0.6 98.4 99.0 0.4 98.7 99.1 Balances with joint ventures and associates are disclosed in notes 16 and 19. Balances with joint operations are eliminated on consolidation. The Costain Pension Scheme Details of transactions between the Group and The Costain Pension Scheme are included in note 21. Transactions with key management personnel Disclosures related to the remuneration of key management personnel as defined in IAS 24 \u2018Related Party Disclosures\u2019 are given in below. Key management personnel, as defined under IAS 24 \u2018Related Party Disclosures\u2019, have been identified as the Board of directors, as the controls operated by the Group ensure that all key decisions are reserved for the Board. As at 13 March 2023, the date of signing of this report, the Directors of the Company and their immediate relatives control 360,067 ordinary shares in Costain Group PLC, which expressed as a percentage of the issued share capital is 0.13% (2021: 0.15%) of the voting shares of the Company. In addition, Mr Bishoy Azmy, non-independent, non-executive director is the director representative of the shareholder ASGC which holds 41,666,666 shares and is a c.15% shareholder of the Company. Bishoy Azmy held no shares in his own name. In addition to their salaries, in respect of the executive directors and executive officers, the Group provides non- cash benefits and contributes to defined contribution pension plans. Executive Directors and executive officers also participate in the Group\u2019s LTIP, DSBP, AIP and SAYE plans, which are detailed in note 21. The compensation of key management personnel, including the directors, is as follows: Group 2022 2021 \u00a3m \u00a3m Directors\u2019 emoluments 1.9 1.2 Executive officers\u2019 emoluments 2.1 1.5 Post-employment benefits 0.1 \u2013 Termination benefits 0.6 \u2013 Share-based payments 0.8 0.6 5.5 3.3 The above amounts are included in employee benefit expense (note 6). ", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-301": { "value": "Costain Group PLC", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-302": { "value": "26 Disposal of other investments During the year, the Group sold a minor stake in a hotel company for \u00a30.5m. The investment was impaired to \u00a3nil in 2020 reflecting the significant impact of COVID-19 in that sector, so the profit realised this year is also \u00a30.5m. Both the previous impairment (in 2020) and the profit on sale were reported as adjusting items in note 3. ", "dimensions": { "concept": "cost:DisclosureOfOtherInvestmentsExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-303": { "value": "27 Events after the reporting date There are no events after the reporting date.", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-304": { "value": "Costain House, Vanwall Business Park, Maidenhead, Berkshire, SL6 4UB", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "fact-305": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:213800PKIJBZ2EDTKC88", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } } } }