On the back of the strong performance and cash position, chief executive Alex Vaughan announced a £10m share buy-back to start with immediate effect.

Revenue at the contractor slipped 4% to £639m in the first six months to June largely because of a fall at the highways business, partially offset by growth at the Natural Resources division.

The revenue fall at the transport division was driven by 15% drop at highways to £172m and a 7% fall in rail to £241m.

At the Natural Resources division, the water sector drove growth, up 12% to £120m.

Vaughan added that the ongoing business transformation programme incurred £2.3m of restructuring costs with a forecast total cost of £5m at the end of the financial year.

He said: “In the first half we have delivered a further significant increase in operating profit together with a sharp growth in earnings per share.

“The net cash balance grew to £166m, adjusted operating margin increased as expected.”

Vaughan said Costain was now on track to meet margin targets of 3.5% and 4.5% for this year and next.

The combined order book and preferred bidder book, rose to £4.3bn (H1 23: £4.0bn), representing more than three times annual revenue.

Vaughan added Costain had secured 90% of forecast revenue for the year.

He said: “As a result of our confidence in our long-term prospects, and our strong cash position, we have today announced a £10m share buyback which will commence with immediate effect.”