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Challenging conditions hit ISG profits

11 Sep 12 Interior Services Group (ISG) has reported a 9% rise in revenue for the year to 30 June 2012 but a big fall in profits.

Chief executive David Lawther
Chief executive David Lawther

Revenue from continuing operations for the year was £1,281m (2011: £1,174m). Pre-tax profits were down 70% to £3.0m (2011: £10.2m).

Underlying profit before tax was down 40% to £7.5m (2011: £12.4m), while basic earnings per share fell from 22.17p the previous year to 2.43p this time.

Overall, UK profitability fell in the face of ‘a challenging economic environment’ but profits from the burgeoning overseas business nearly quadrupled to £3.5m.

The UK Fit Out operation maintained revenue at £347m (2011: £342m), with operating profit down 19% at £6.5m (2011: £8.0m).

Continental Europe Fit Out saw revenue increase by 39% to £101m (2011: £73m), operating profit hit £2.3m (2011: loss £800k) and order book double to £40m.

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The smaller fit out operations in the Middle East and Asia also both saw growth on revenue and profits.

In Food Retail, revenue decreased by 9% to £199m (2011: £218m), reflecting a decrease in new build project activity. Operating profit more than halved to £2.3m (2011: £5.2m), with margins impacted by customers focusing on reducing costs. With supermarkets tightening their belts, the order book is lower at £116m (2011: £140m).

ISG’s Construction division increased revenues by 17% to £533m (2011: £455m) on the back of the LOCOG London 2012 overlay works contract. The company’s southwest division returned to profitability in Q4 after a restructuring of business,although it made an overall loss in the year, which impacted profits. Because of this, construction profits declined to £900km (2011: £3.6m).

Chief executive David Lawther said: "ISG has delivered a resilient performance in market conditions that continue to be challenging.  In the UK, we have maintained our market leading positions, and have successfully delivered substantial projects for LOCOG as well as for our key customers and frameworks.  In addition, we have targeted a number of growth sectors and achieved particular success in data centres.  Internationally, we have experienced strong growth in Europe and Asia where we continue to see opportunities for growth, and as a result we have succeeded in quadrupling our profits from our overseas businesses.

“Looking ahead, the group is well placed to benefit from a recovery in the UK and from our presence in key global locations that are attracting inward investment.  We are confident of our strategy and will continue to target growth both organically and via acquisition."

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