In the six months to 31st December 2014, ISG made a loss of £20.8m, compared to a profit of £1.7m for the same period in 2013. Underlying pre-tax loss was £7.2m, compared to a £7.8m profit the previous year.
Revenue from continuing operations was £819m for the half year (2013: £682m).
While there were strong performances from UK Fit Out and Engineering Services, UK Retail and International divisions, the UK Construction division generated a loss of £16.0m. This was due to provisions and losses on contracts entered into more than 18 months ago.
The London Exclusive Residential business is being discontinued with full-year losses of £6m forecast. There are five larger contracts in this division of which two have achieved practical completion and the remaining three are due to complete by the year end. The completion of these live contracts will be overseen by ISG’s London Fit Out division.
As previously reported, ISG is also making further provisions for increased losses of £11m related to the closure of its Tonbridge business. This follows a recent review found that there were difficulties getting paid. “All contractual entitlements continue to be vigorously pursued,” said chief executive David Lawther.
Mr Lawther said: "We have taken decisive steps to reform our UK Construction division and the issues caused by older contracts will be closed out. Higher quality and larger contracts are now in progress.”
He added: “Elsewhere, our UK Fit Out and UK Retail businesses continue to lead their markets and perform very well. We plan further progress for our Engineering Services business as it continues to build its reputation across Europe. Overseas, we are capitalising on increased market activity and a growing reputation.”
To strengthen the equity capital base and generate working capital ISG is raising £16m by a share placing. The money will also be used to support growth opportunities in its Engineering Services and Realys consulting divisions.
Got a story? Email news@theconstructionindex.co.uk
