Costain has reported a rise in profits as it continues towards transforming the business into a leading smart infrastructure solutions company in the UK.

In its half-year results, underlying operating profit rose 34% to £21.2 million (2016: £15.8m) while revenue increased to £874.5m (2016; £791.4m).

In addition, pre-tax profit rose 39% to £15.7m, compared with £11.3m in 2016. However, the company's order book dipped slightly from £3.9 billion in 2016 to £3.7bn this year.

Chief Executive Andrew Wylie said the Group's increase in operating profit "reflects the continued strong performance in the Infrastructure division and a significant improvement in the Natural Resources division".

Speaking about the Infrastructure division, Mr Wylie said: "The division, which operates in the highways, rail and nuclear markets, delivered another good performance in the first half of the year with revenue (including share of joint ventures and associations) increased to £694.1 million (2016: £613.2 million) and operating profit (before other items) of £24.8 million (2016: £27.4 million).  The margin achieved reflects the timing of returns across a range of contracts, together with the high level of bid costs in the period. As previously advised, we continue to target an underlying blended operating margin of 4%- 5%."

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Concerning the Natural Resources division, Mr Wylie commented: "The Natural Resources division, which operates in the water, power and oil & gas markets, made significant progress during the period.  Revenue (including share of joint ventures and associations) was £177.7 million (2016: £175.7 million) with a small profit from operations (before other items) of £0.2 million (2016: £8.4 million loss).

"The significant improvement in the performance reflects expected growth in water sector activities and no additional impact from the legacy waste PFI contract as compared to last year. This was offset by lower contributions from the Oil & Gas operations, where we have retained skills and capabilities in anticipation of an expected improvement in market conditions, and the timing of returns across a range of contracts. The medium-term blended underlying target margin remains at 4%-5% for the division."

Mr Wylie also revealed Costain had withdrawn from its Hinkley Point marine and tunnelling package after it failed to reach an agreement with EDF on the final terms and conditions.

Overall, the Chief Executive said the business is on course to deliver its targeted results this year.

"We are transforming rapidly to differentiate Costain as the UK's leading smart infrastructure solutions company," he said.

"We are delivering technology-based solutions demanded by our clients who are spending billions of pounds, underpinned by legislation and regulation, to meet ever more complex challenges to enhance the nation's infrastructure."

(LM)