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Tue June 02 2020

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Asian growth helps ISG deliver for Texan owners

19 May ISG has posted its third consecutive year of improved financial results since being taken private by Texan venture capitalists.

ISG chief executive Paul Cossell
ISG chief executive Paul Cossell

ISG, previously stock exchange listed, was taken over by Cathexis Holdings in 2016. Its annual report for 2019 shows a pre-tax profit of £44.2m (2018: £27.4m) on revenue of £2.58bn (2018: £2.2bn), with a £25m dividend paid out to the owners.

When ISG was taken private, chief executive Paul Cossell announced a target of £50m underlying profit before tax by 2021. With an underlying pre-tax profit of £52.5m for 2019 (2018: 38.5m), the target has been achieved two years early, prompting Mr Cossell to declare it ‘a banner year’.

The current year is unlikely to be quite so good. ISG expects its revenues for the four months March to June 2020 to be down 25% due to the impact of Covid-19 restrictions. Beyond that remains largely unpredictable.

ISG’s star performer in 2019 was engineering services, where growth related in a £25m profit (2018: £11.6m) on revenue of £799m (2018: £484m). However most of this – 84% of engineering services revenue – came from outside the UK (and mainly Asia).

The biggest part of the business remains fit-out, although its contribution to group revenue dipped slightly from £1.23bn in 2018 to £1.22bn in 2019. However, fit-out’s underlying pre-tax profit rose from £21.2m to £23.1m.

Revenue from construction rose to £562m (2018: £520m), with underlying pre-tax profit dipping from £5.7m in 2018 to £4.4m in 2019.

The balance sheet shows total net assets of £123m, of which £168.9m is listed as goodwill,

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