(Alliance News) - Costain Group PLC on Wednesday said it has been appointed by Northumbria Water Group Ltd to help with its strategic infrastructure upgrade programme for the UK regulatory asset management period 8.

Shares in Costain were up 7.0% to 67.00 pence each in London on Wednesday morning.

The Maidenhead, Berkshire-based construction and engineering firm said the contract with Durham-based Northumbria Water starts immediately and will run for a seven-year initial term with an option for a five-year extension.

Costain said through the framework, it will be awarded contracts with a potential value of up to GBP670 million during a 12-year period.

Work involves the design construction and commissioning of new water and wastewater treatment assets, asset renewals, asset modifications, and refurbishments and extensions to treatment works, Costain said.

Chief Executive Officer Alex Vaughan said: "Costain is a leading business partner to the water industry, ensuring that water companies achieve value for money as they meet the needs of their customers and the regulator during this crucial period for water investment. We are looking forward to supporting Northumbrian Water in this new working relationship, upgrading both its wastewater and water treatment infrastructure to improve people's lives and safeguard the environment.

"This contract win not only reflects our continued growth in the water sector, but it also reinforces our commitment to improving critical infrastructure in the north east of England."

Costain noted that it also works with United Utilities Group PLC and Yorkshire Water Services Ltd.

In addition, Costain said it has had a positive trading year in 2023 and expects to deliver adjusted operating profit in line with market expectations.

Peel Hunt expects GBP40 million in pretax profit for Costain and said market consensus is for GBP39.7 million. This would be up 21% from GBP32.8 million in 2022.

Costain's net cash position at December 31 was GBP164.4 million, up 33% from GBP123.8 million a year before, and "significantly higher" than market expectations of GBP128.6 million.

"Our cash performance has been very strong, driven by continued improved operational performance, an increase in financial income compared to 2022, and ongoing positive working capital timings," Vaughan commented.

Costain will release its 2023 results on March 12.

By Sabrina Penty, Alliance News reporter

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