ISG posts £27.8m loss
Problems at ISG’s Construction division have been revealed today with a loss of £27.8 m and have seen ISG’s Tonbridge office closed and the London luxury residential operation shut down after a “painful restructuring of the UK Construction division”.
Construction has also “recognised significant losses on a small number of projects that are now complete.”
ISG said: “In addition to the £18m of losses reported in the first half, the Group in the second half has made further provisions of £8.5m for London Exclusive Residential and £4.8m for Tonbridge.
“These covered 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.”
The extra provisions mean the Tonbridge closure has cost £15.8m and London residential £15.5m.
ISG bosses are confident their construction woes are behind them and staff numbers rose at the division to 898 from 838 despite the closures.
Chief executive David Lawther said: “It has been a challenging year for ISG, with the Group performance significantly impacted in the first half by the losses in our UK Construction division.
“We delivered a significantly stronger second half performance, with good results especially in our specialist fit out, engineering services and retail businesses.
“We believe that the poor performance and painful restructuring of the UK Construction division is now behind us, and with the outlook for most of our key markets remaining strong, we expect a much improved overall performance for the Group in the year ahead.”
Turnover for the year to June 30 2015 rose to £1,629m from £1,455m as losses hit £27.8m from a profit of £2.4m last time.
UK Fit out and engineering services made a £16m operating profit on turnover of £630m while UK retail made £9m from £320m of revenue.
UK Construction made an underlying operating loss of £18.1m.
Lawther said: “Looking ahead, the London office fit out market remains strong and, in the short-term, will be focused on medium-sized and refurbishment projects, whilst in the medium term, we will see larger-scale projects feature more prominently again.
“The UK’s economy is stable and we expect further opportunity in other major UK cities.
“With strengthened management, a simplified structure, a focus on repeat business and more favourable market conditions, a significant improvement in the performance of our UK Construction division is expected.
“Overall, we expect a much improved performance in the year ahead.”