ISG鈥檚 UK construction business has posted an 18% rise in revenue to 拢280m, with margin of 0.2% generating profit of 拢700k
Reporting its interim results for the six months to 31 December 2012, ISG Group reported revenue of 拢659m, up 6% on the same period in 2011, generating pre-tax profit of 拢2.2m, down 1% on 2011.
But the firm鈥檚 construction business continued to struggle, posting revenue of 拢280m, up 18% on 2011 - a rise the firm attributed to its London 2012 overlay works contract - but with an operating profit of 拢700k, up from a loss of 拢518k for the same period in 2011, and an operating margin of just 0.2%.
The firm said the strategy of its construction business was to focus on repeat customers and frameworks.
It said the market 鈥渞emained competitive and we have seen particularly tough trading conditions in our East region where we are in the process of a reorganisation to reflect current market conditions鈥�.
It said its construction order book was up 8% to 拢409m, of which 拢238m is for delivery in the current financial year - down 11% on the same period last year.
鈥淗ence we anticipate that revenue in the current financial year will be lower than [the] prior, with margins continuing to be under pressure,鈥� the firm said.
The firm鈥檚 UK fit-out business performed better, posting a rise in revenue of 29% to 拢119m, with a margin of 1.7% generating operating profit of 拢2m (2011: 拢2.3m).
The UK retail business posted fall in operating profit of 13% to 拢2.6m, on reduced revenue of 拢164m, down from 拢185m in 2011.
ISG chief executive David Lawther said: 鈥淚SG has delivered an improved performance and growing order book despite the continuing market challenges in Europe.
鈥淚n the UK, we have maintained our market leading positions in the office fit out and retail sectors, while our Construction business has increased its level of repeat work through its focus on key customers and frameworks.
鈥淲e have continued our progress into the engineering services and hospitality sectors, securing another major project in the period. Overseas, we continue to enhance our reputation and anticipate seeing growth in the second half.
鈥淲e will continue to manage our cost base, to target growth sectors and to invest in our overseas businesses.鈥�
ISG interim results
UK Construction
- Revenue increased by 18% to 拢280m (2011: 拢237m) on the back of London 2012 Games overlay works contract, generating an operating profit of 拢0.7m
- Strategic focus is on repeat customers and frameworks
- Market conditions remain challenging - in process of reorganising UK East region
- Order book increased to 拢409m (2011: 拢377m) and now weighted 65% towards private sector (2011: 58%)
UK Fit Out
- Operating profit of 拢2.0m (2011: 拢2.3m) on revenue of 拢119m (2011: 拢92m)
- London office fit out market remains competitive, with project sizes smaller, but larger scale projects beginning to re-emerge
- Increased revenue from growing engineering services market
- Order book up 83% to 拢170m (2011: 拢93m)
UK Retail
- Operating profit, as anticipated, decreased to 拢2.6m (2011: 拢3.0m), on reduced revenue of 拢164m
- Business has maintained its market leading position and margins are stable
- Substantial work under frameworks carried out for the leading major UK supermarket and retail banking brands
- Order book lower at 拢102m (2011: 拢148m) reflecting decrease in investment in new build projects by retail customers
Continental Europe
- Operating profit of 拢1.1m (2011: 拢1.3m) on revenue of 拢51m (2011: 拢53m)
- Office fit out business saw France and Germany performing well, but Italy weaker
- Retail fit out business continuing to grow, working for several repeat customers
- Order book lower at 拢26m (2011: 拢49m); since period end awarded 拢15m of projects
Middle East and Africa
- Later project starts have again impacted the first half results
- New office in Johannesburg opened
- Order book up 100% from prior year to 拢20m supports a stronger second half
Asia
- Operating profit maintained at 拢0.7m (2011: 拢0.7m) reflecting higher margins despite lower revenue of 拢35m (2011: 拢47m)
- North Asia driven by strong retail, hospitality and leisure sectors
- South East Asia, successfully diversified into hospitality and leisure sector
- Continue to invest for growth in our consulting businesses
- Order book higher at 拢39m (2011: 拢27m) supporting stronger second half activity in South East Asia
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