ISG enjoys 27% jump in pre-tax profit

Interior Services Group (ISG) has enjoyed a 27% rise in pre-tax profit to £13m. The group’s net cash is also higher at £35m, representing an increase of £13m.

ISG’s latest financial results cover the 12 months to 30 June 2008.

The gross value of work performed ran to £1.1bn which was 33% higher than the previous year’s figure of £830m.

David Lawther, chief executive, said: “We have had another successful year. We have built our business in the UK and abroad, reducing the group's dependence on the London office market. This strategy will continue to benefit us.

“We have a strong order book, are well financed and have the visibility to be confident of further progress in the current year." 

The orderbook at the end of June stood at £1.1bn (figure at the end of the previous year: £840m).

Over the past three years, the priority to step away from a dependence on the London office sector has resulted in the operating profit outside London climbing from 11% to 57% of the group’s total.

Segmental analysis shows:

London

• Volumes grew by 15% to £590m.
• Fee income up by 15% to £65.
• Volume target for the current year has been trimmed back by 23% to £450m.

London Fit-out

• Volumes stayed constant at £310m.
• Orderbook stands at £100m.

London Build

• Fee income up 27% to £28m as workload increased by a similar percentage.
• 10 new-build.
• 15 refurbishment projects.

Regional Construction

• 44% rise in volumes to £300m.
• 33% lift in fee income to £40m.
• Volume and fee income increases partly as a result of aquisition of Pearce Construction .
• Organic growth of 22% backed up the work brought in Pearce.
• Pearce brought in an operating profit of £200,000 as “the business was completing a number of challenging projects with low inherent margins”.
• With a new divisional director at the head of affairs, ISG is looking for “substantial improvement” in the current year.
• The forward orderbook is 30% higher at £310m.

ISG Asia

• A record year with an operating profit of £1.8m (figure in previous year: £800,000).

Europe

• The forward orderbook at 30 June was £8m.
• The value of secured work secured since the year-end has added a further £17m.

Lawther added his own take on ISG’s future prospects, saying: “Recent large project wins of the velodrome for the 2012 London Olympics, the new UK headquarters for KPMG and the five education projects totalling £130m have increased our confidence levels.

“We expect that continued growth in Asia, our new joint venture in the Middle East and our expanding European operations will all enable the group to lessen its dependence on the UK market.

“In the UK the greatest impact so far from the deteriorating economic climate has been in the private residential market where we have little exposure. In anticipation of tightening commercial demand, we have reduced our dependence in London on the office market whilst increasing our regional involvement in education and affordable housing.”