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Growth in the London office fit-out market has helped ISG post an improved performance over the first half of its financial year, but the firm鈥檚 construction business continued to struggle, with revenue down 17% and its profit falling to just 拢100k.

Reporting its results for the six months to 31 December 2013, ISG posted revenue of 拢708m, up 8% on 拢659m last year, with pre-tax profit rising 7% to 拢2.4m.

After stripping out 拢2.5m in one-off costs, including 拢1.4m related to the restructuring of the UK construction business, the firm posted underlying pre-tax profit of 拢4.9m, up 29% on the same period in 2012.

But ISG鈥檚 construction business continued to struggle, with revenue down 17% to 拢234m and operating profit down 86% to 拢100k, giving the business an operating margin of 0.04%.

ISG said it anticipated margins in its construction business would 鈥渃ontinue to remain low in 2014 as we work out projects secured during tougher market conditions in the preceding periods鈥�.

Last year ISG rationalised its regional structure from seven to just three regions, which led to 拢1.4m of restructuring costs over the period.

The firm said the move had 鈥渟implifed鈥� the business, with the firm investing in its 鈥渆ngineering, project delivery and supply chain capability鈥�.

鈥淚n the last quarter, we have seen a marked improvement in customer confidence,鈥� ISG said.

鈥淭his has translated into several significant larger project wins and an improving pipeline in our target sectors and regional operations. We continue to focus on key repeat customers and frameworks.鈥�

The firm鈥檚 fit-out business performed more strongly, with revenue up 76% to 拢210m (2012: 拢119m), and underlying operating profit rising to 拢3m (2012: 拢2m).

ISG said the London office fit-out market had 鈥渕ade a strong recovery鈥� with the firm now working on six 拢20m-plus schemes, with a combined value in excess of 拢300m.

ISG鈥檚 retail business posted a 5% fall in revenue to 拢156m (2012: 拢164m), with underlying operating profit improving to 拢3.2m (2012: 拢2.6m).

ISG chief executive David Lawther said: 鈥淚n line with expectations, ISG has delivered an improved performance and growing order book.

鈥淚n the UK, some of our traditional key markets have started to improve in line with the general economic recovery and we continue to maintain market-leading positions in the office fit out and retail sectors. 

鈥淥ur UK Construction business has invested in its planned restructuring and is starting to see an improvement in its pipeline. 

鈥淥verseas, we are seeing growth with most of our major markets improving.

鈥淲e anticipate a continuing improvement in our key markets and that our performance will continue to improve.鈥�