ISG has been hit by a 61% drop in profit for the six months to 31 December 2009.
The contractor posted a pre-tax profit of £2.4m for the period, compared to £6.3m for H1 2008. Revenue was also down, by 14%, to £484m, as ISG felt the economic downturn in one of its core markets, commercial offices.
However, the firm was upbeat about its outlook, and said it would pursue further growth organically or through acquisition.
ISG’s profit would have been higher but for a £1.9m exceptional item, representing the firm’s estimate of fines and legal costs relating to the Office of Fair Trading's cover pricing investigation of two subsidiaries, Propencity and Pearce, prior to ISG's ownership. It has lodged an appeal against the fine imposed on Pearce.
ISG’s order book in December stood at £780m, a drop of 18% on a year previously. Some 63% was private sector work.
Net cash at the end of the half-year was £32m, ahead of the £26.8m reported at the end of 2008.
ISG said it saw a recovery in the corporate office market during the last quarter of 2009, which had been severely hit by the global economic and banking crises.
“Our blue chip clients have recommenced their capital investment programmes across London, Europe, Middle East and Asia,” said chief executive David Lawther.
He added that there had been strong demand from UK food retailers and UK bank branch roll-out programmes throughout the economic slowdown, though demand was weak from UK high street retailers.
Lawther said ISG’s regional construction businesses had a “strong” first half.
“However, we are planning for the likelihood of reduced volumes and project sizes in public sector work. On top of flat private sector demand in the regions, this will increase competitive pressures.”
Lawther said the group was targeting three main markets:
- Multinational corporate office and retail fit-out, across the UK, Europe, Middle East and Asia;
- National food retail customers across the UK;
- Regional-based construction across the UK.
“While our markets remain highly competitive, we have weathered the worst of the fallout from October 2008 and as these results demonstrate we are emerging in good health,” summarised Lawther.
“We now feel confident that the Group is well placed to resume the growth path demonstrated from 2004 through to 2008 as the markets recover. We will continue to pursue organic growth and