Costain's policy to avoid the spending cuts

Costain Group reported a higher first-half profit and the construction firm said it planned to focus on priority government schemes that are unlikely to be hurt by spending cuts.

The company, whose capital exposure to the government sector is about 20 to 25 per cent, said it had committed investment plans for prioritised schemes in the UK.

"The public sector is spending something like 30bn in the next 12 months... and it is our intention to capture our share within that," finance director Tony Bickerstaff said.

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"We're hoping none of our revenues will be impacted by public sector cutbacks."

The company's infrastructure division, which undertakes activities in the highways, rail and airports sectors, continues to perform well, as the government remains committed to projects like Crossrail.

Crossrail, whose first trains are due to start service in 2017, is an ambitious project to build east-west commuter lines that pass through central London.

"Having re-focussed the business towards areas of essential spend..., we believe the group stands in the best possible position to ride out the government spending cuts," analyst Kate Moy of Arbuthnot Securities said.

The analyst maintained a 'buy' recommendation on the stock.

The company, which maintained an order book of 2.5bn, said it would pay an interim dividend of 3 pence per share, up 9 per cent from the previous year.