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  • You are here:ISG

ISG profit doubles despite UK construction loss

ISG has seen its pre-tax profit double to £6.75m for the year ended 30 June following a strong performance in fit-out and engineering services, despite its UK construction arm posting an operating loss of £1.2m.

In its accounts for the year, the contractor saw its pre-tax profit, excluding exceptional costs, rise to £11.5m from £9.1m the previous year.

Revenue for the period jumped 19 per cent to £1.48bn from £1.24bn in 2013, with its order book ahead by 18 per cent at £1bn from £854m the year before.

Basic earnings per share increased by 48 per cent to 13.53p from 9.17p, with dividend per share up 5 per cent to 9.45p from 9.00p in 2013.

The company’s UK fit out and engineering services saw sustained growth, with revenue for the year increasing by 81 per cent to £520m from £288m in 2013.

Operating profit in the division reached £9.9m, compared with £5m the year before, resulting in an improved margin of 1.9 per cent, up from 1.7 per cent the year before.

The group said this was driven by large-scale fit outs in London, including a £125m construction management contract to deliver the new 700,000 sq ft UK headquarters for UBS at 5 Broadgate.

ISG is scheduled to begin work on site at the start of 2015, following a 12 month pre-construction period.

Revenue from its London fit out business increased by 66 per cent to £270m from £163m the year before.

But ISG said the “challenging” construction market in the year had resulted in revenue declining for its UK construction business to £463m, compared with £499m the year before.

The contractor said margins continued to be “commercially challenging on projects [it had] entered into more than a year ago”, with the business generating an operating loss of £1.2m, compared with an operating profit of £1.6m the year before.

During the year the company restructured and reduced the size of its construction business, which included the decision to close down its office in Tonbridge in the second half of this year.

However it said it expects margins to improve and to see a return to profit in 2015.

David Lawther, chief executive said: “I am delighted ISG has delivered an improved performance and increased order book.

“Our diversification strategy, combined with the recovery of our traditional UK markets, positions the company for continued growth.  Overseas, our businesses are benefiting from a growing reputation.

“We anticipate further improvement in our results in the coming year.”

More to follow

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