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ISG benefits from supermarket 'frameworks'

ISG is continuing to benefit from a steady supermarket workload through “informal frameworks”, its chief executive told CN today.

David Lawther’s company this morning reported a 23 per cent increase in revenue for the year to 30 June 2011, with an 82 per cent turnover surge to £218 million in the fit out and new build food retail sector. The order book in food retail stands at £140m (2010: £113m).

“We have spent a lot of time working with these core clients, all of those have informal frameworks and clearly in terms of allocations of schemes coming down the pipeline, we have visibility as they come through,” he said.

“Clearly Tesco, Sainsbury, Asda and Morrison are all committed to their capital spend in the UK, with a mix of refresh work, fit out and new build; and within our repertoire we can offer the full range of services to clients, which puts us in a strong position.”

In the year to 30 June, 78 per cent of ISG’s revenue came from the private sector. Fit out saw £342m of sales, although margin dropped slightly from 2.4 per cent to 2.3 per cent last year.

Mr Lawther said: “It is a competitive market out there, margins remain under pressure and customers are aware of that and therefore the type of projects and forms of contracts that have been taken on are less two stage and more single stage.”

In London, Mr Lawther said there will be a number of lease terms coming to an end in 2013, with retailers either deciding to find new units or refurbishing what they have.

In 2010, £476m of the company’s overall £1.19 billion revenue came from construction, but at a margin of 0.6 per cent as a result of a £2m restructuring cost incurred by the struggling South west business and a drop in public sector work.

Mr Lawther said the recovery in the private sector has not offset the public sector construction drop, resulting in a reduction in headcount in certain parts, but stressed that the group’s construction headcount was up (from 922 to 1,051), as were overall employee numbers (from 2,028 to 2,527).

After completing the Olympic Velodrome ahead of time and budget, and winning the contract to deliver temporary infrastructure to the Olympic stadium, Mr Lawther said the games has been a “great advert” for the UK construction industry. He put the success down to careful planning and management of projects, along with managing the expectations of clients and stakeholders.

Mr Lawther dismissed the idea of a post-Olympic construction slump, saying there would be opportunity through its legacy of East London regeneration.

See the latest ISG contract wins at CNInsight.


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