ISG’s 2014/15 financial performance will be hit by a loss of up to £2m incurred on problem contracts taken on by its UK construction arm in 2012 and 2013.
In a trading update to the City this morning, the group also revealed it had set aside £10.5m to pay for the closure of its London prime residential business and Tonbridge office, both of which formed part of its UK construction business.
In the update, ISG said: “We believe the poor performance and painful restructuring of the UK construction division is behind us.”
The group added: “We continue to improve the risk profile of this division by strengthening delivery and management and by focusing on repeat customers and frameworks in key sectors.”
ISG said it expected its full-year financial results to be in line with previous expectations, notwithstanding the results of negotiations around the problem contracts.
The company said it had a “strong trading outlook” with an order book standing at £1.1bn at the end of May 2015, up 6 per cent on the previous year.
It had a net cash balance of £50m at the end of June, adding that it expected its cash position “to improve through the new financial year”.
As reported in March, ISG posted an underlying loss of £7.8m for the six months to 31 December 2014 following a “deterioration in project performance” on legacy UK construction contracts.