2011 results show return of office fit-out market, but hit by south-west restructure
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Contractor ISG saw revenue expand by almost a quarter in 2011 on the back of recovery in the private sector fit-out market, returning turnover to more than £1bn.
The firm reported revenue of £1.2bn for the 12 months to June this year, 23% up on the £972m reported in 2010.
However, profit at the contractor did not expand as continuing margin pressure in the UK business, restructuring in its south-west operations and a large problem job in Europe took its toll. Adjusted profit before tax was £11.5m, marginally down on the £12m recorded in 2010.
Chief executive David Lawther said he was “very pleased” with the results given the challenging market conditions. “While the global construction market continues to be challenging, there have been signs of recovery in our key sectors and geographies and the company is continuing to perform well.
“We have won work during the year totalling £1,204m (2010: £892m) enabling us to finish the year with our best ever total revenue.”
The company’s UK fit-out business reported revenue up by 32% to £342m, and profit up by 27% to £8m. The firm said 78% of its forward order book was now private sector work, compared with 64% last year.
However, the firm’s UK construction business saw operating profit half on flat revenue, despite benefitting from the purchase of part of Rok’s Scottish business. The firm said this was down to declining markets outside of London and the South-east, which, in particular, its south-west business was slow to react to. The team has since been restructured, although ISG declined to give a figure on job losses. Nevertheless, the overall number of staff at the construction division grew 13% with the Rok acquisition.
Overall staff number at ISG increased over the year by a quarter to 2,527. Lawther said: “As project sizes have reduced in scale so you need more resources to handle them. As a business we have increased the headcount, despite the fact parts have had to downsize.”