Restructuring cost the group £3.1m last year and the south east division is currently being re-organised following an earlier shake-up in the south west and streamlining in the eastern and midlands divisions.

The new regional structure will see Scotland, the north east and north west grouped together. The south west, Wales and the midlands will form another region and the south east the third.

Revenue at the UK construction business dipped to £538m for the year to June 30 2013 from £554m last time but there was a slight improvement in margins to 0.3% leading to increased operating profits of £1.1m from £700,000.

Chief Executive Officer David Lawther said: “As market conditions remain challenging we are in the process of reorganising our Construction business into three regions in order to optimise operational efficiency.

“Undoubtedly our UK Construction business will continue to operate in a challenging market, but our strategy here is to focus on better contract selection, delivery excellence and overhead efficiency.”

Group pre-tax profits improved to £2.5m from £1.2m last time on a flat turnover of £1,284m.

ISG said the fit-out market is improving led by London  and it is “looking forward to the future with growing confidence.”

The company has a £7.4m war chest to fund future acquisitions and enjoyed a jump in operating margins to 2.1% from £1.6% in its UK retail division.

Any acquisitions are expected to focus mainly on overseas companies.

Lawther said:  “Market conditions for our formal frameworks in our UK Retail business remain stable, and we continue to grow new relationships.

“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.”

Total staff numbers at ISG fell to 2,449 in 2013 from 2,604 the previous year while employees at the construction division dropped to 929 from 1,131.