Costain has received a series of adjudication decisions following a contract bust-up with National Grid.
The contractor and client parted ways in June 2020 more than halfway through a £113m upgrade to gas compressor stations at Peterborough and Huntingdon.
In a stock echange update today Costain said: “Under the terms of the termination agreement with National Grid, there is an expected requirement to make a payment of £53.5min January 2022, which now represents the maximum cash outflow under the contract.”
The adjudicator found in Costain’s favour in principle in three out of the four compensation events but chose not to determine the financial amounts in respect of them.
Costain said: “We will pursue a financial settlement with National Grid in respect of these compensation events. As not all compensation events have been decided in our favour, we now expect there to be an overall cash outflow in respect of the contract.
“Given the recent adjudication decision, we have an entitlement to recover a proportion of this payment and will be discussing the timing and amount with National Grid
“The payment, if made, will not affect our banking arrangements and we will continue to have a strong balance sheet that enables us to deliver our business plan.
“There will be an associated charge to the income statement for the current financial year reflecting such payment.”
The contractor added that year end net cash, before any period end timing benefits, will now be ahead of market expectations at around £100m while full year adjusted operating profit is expected to be in line with market expectations.
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