Ongoing losses on four live contracts due to subcontractor insolvencies

ISG has said it will incur a further £10.5m in costs in closing its luxury London residential business and Tonbridge office.

In a trading update the firm said winding down the two operations would cost it a further £5.5m, and £5m, respectively.

ISG said the provisions cover the “unexpected cost overruns and delays on the remaining four live projects, unanticipated sub-contractor insolvencies and a mixed outcome of final account settlements and adjudication decisions, all of which have recently arisen”.

ISG previously made £17m of provisions for the two closures in a £7m profit warning in February.

ISG said today’s provisions would not impact on overall expected profit, thanks to better than expected performance in the company’s fit-out, engineering services and retail businesses in the UK and overseas.

ISG added: “We believe the poor performance and painful restructuring of the UK Construction division is now behind us.”

The firm also announed it had won £80m of commercial office schemes over the past three months, including a £24m office development in Stockley Park, near Heathrow, and a 70,000 sq ft fit-out for insurer Zurich at 70 Mark Lane in the City of London.