The firm, which unveiled year-end pre-tax profits sharply up 54% to £27.9m, would not detail its plans but said it had enough cash reserves and borrowing head room to exploit major market opportunities.

Chairman, David Allivey said: “Our strategy of growing the business through a combination of organic growth and targeted acquisitions is providing a number of exciting options for us to consider.”

He said that Costain’s four bid approaches for Mouchel was an example of the firm’s ambition.

Allivey added: “We are actively progressing a number of opportunities ranging from bolt-on to transformational transactions, and all of which must meet a strict set of criteria in the event that they were to be concluded.”

Andrew Wyllie, chief executive said: “Our banking and bonding facilities were extended early in the year to 2013 and increased by 20% to £345m.

“Consequently, we have the necessary headroom available to capitalise on major market opportunities as they arise and achieve our longer-term strategic objectives.”

Wyllie also said Costain also said it had not walked away from Mouchel, even though the consultant was in preferred offeror talks with Interserve.

“We haven’t walked away and we are very much in an offer period.”

The big rise in profit was helped by  gains from PFI sales to reduce the pension deficit, while turnover slipped 4% to £1.022bn.

Discounting PFI sales, operating profits fell 20% to £17.4m as tougher trading saw margins fall from 2% in 2009 to 1.7% last year.

Following major contract awards Costain’s order book at the year-end held up at £2.4bn down slightly from £2.6bn last year.

Big wins included the Highways Agency Managed Motorway framework, Welsh Water AMP 5 contract, a 10-year nuclear framework for Magnox South, Bond Street station upgrade for London Underground and cable tunnel infrastructure for National Grid.

Net cash at the end of the year had risen to £144m.

Trading profits at the environment division doubled to £6m even after allowing for the £11m gain from selling six PFI investments.

At the infrastructure business profitability was impacted by a high level of bidding costs and a high level of project bonuses in 2009. The year-end order book grew 10% to £1.1bn.