Trading Update

Costain Group PLC
30 June 2006




Costain Group PLC
('Costain' or the 'Group')



Pre-close trading update



Ahead of the announcement, on Wednesday 30th August 2006, of interim results for
the six months ended 30 June 2006 Costain is issuing a trading update.



In line with the update given at the Annual General Meeting in April, the Group
continues to benefit from high levels of customer spend in its targeted markets.
  As a result, turnover growth in the first half was very strong against the
same period last year.  Over the same period, the Group's forward order book
increased to a record mid-year figure of £1.9 billion, up 19% on the comparable
figure.



In March, the Group unveiled its new strategy - 'Being Number One' - with its
emphasis on establishing market leading positions in selected sectors.  Whilst
the core activities of the Group have performed well, two smaller divisions,
International and COGAP, the Group's oil & gas division, which do not enjoy
strong market positions, have continued to struggle.



It has therefore been concluded, that whilst international opportunities will be
pursued by each of the Group's core divisions, providing they complement the
Group's strategy of focussing on key targeted sectors, the International
Division will be closed with immediate effect.  Several of the existing
contracts will be reallocated to the Group's core divisions, with the balance to
be worked through, and a number of overseas offices will be closed.



The executive management team is also taking action to ensure a greater degree
of focus is brought to COGAP.  The division needs to deliver improved
performance.  Progress will be closely monitored and further appropriate action
will be taken if required.



The Board is confident that the performance of the Group's core activities will
be in line with its expectations both at the half year and for the year as a
whole.



The interim results will, however, include provisions in respect of the
management actions associated with the International Division outlined above.
Whilst the provisions continue to be reviewed in detail, and will be confirmed
in the interim results announcement, it is expected that they will be in a range
of £12 million to £14 million, of which only circa. £3 million will have a
future cash impact.



The strong performance of the Group's core activities, and the rapid remedial
action being taken in respect of underperforming operations, should ensure that
the Board is able to consider, subject to meeting the necessary conditions, a
resumption of a final dividend payment in respect of 2006.



Andrew Wyllie, Chief Executive, commented:



'Costain has made progress in the first half and our core businesses are
performing strongly.  This is reflected in the excellent advance in the forward
order book.  We are resolute in achieving our strategic objectives and will                    
continue to take decisive action against underperformance.'


                                                                    30 June 2006


ENQUIRIES:
Costain Group PLC                                    Tel: [phone]
Andrew Wyllie, Chief Executive
Tony Bickerstaff, Finance Director

College Hill                                         Tel: [phone]
Mark Garraway
Matthew Gregorowski




                      This information is provided by RNS
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