ISG bucks the trend with record-breaking year

Aaron Morby 5 years ago

ISG is brushing aside concerns about Brexit uncertainty with plans to grow profits by up to 15% this year after delivering a record-breaking 2018.

Cossell says ISG has taken significant steps towards achieving its vision to become the world’s most dynamic construction services company
Cossell says ISG has taken significant steps towards achieving its vision to become the world’s most dynamic construction services company

Strong growth at both fit-out and engineering services divisions helped revenue soar by over £500m to £2.2bn, delivering a 36% hike in underlying pre-tax profit to £38.5m.

Paul Cossell, chief executive, said he was optimistic about achieving further revenue growth this year of around 10% on the back of an expanded £1.4bn order book.

He added that over the next couple of years in the UK, ISG would target expansion in the Midlands and London, taking on larger projects.

Fit-out work surpassed construction for the first time after booking a record year with a mix of both large London commercial jobs and smaller orders for the below 50,000 sq ft sector through its specialist Agility business.

Construction’s performance was dampened by the southern region, which fell short of revenue target for the year, due to project delays. But the other two divisions Western; and northern England/Scotland performed well on the back of public sector work wins, lifting divisional revenue by 8% to £520m.

Despite growing concern in the market about future building workloads, ISG said it entered the year with a forward construction order book up 22% to nearly £500m.

Cossell said: “Set against the wider sector backdrop of high-profile corporate failure and reversing financial performance for many UK-based main contractors, ISG’s record results demonstrate the efficacy of our technology and specialism-led approach.”

He added that ISG had won some of its biggest projects across its core sectors including offices, technology, science and health, and education.

Also for the first time, it delivered significant projects in the logistics and distribution sector for clients including a major internet-based retailer.

Looking ahead Cossell said construction would focus on retaining repeat business and increasing project sizes. He said the firm was aiming to improve margin to 2% this year with a long term aim of 4% by 2024.

The bumper year saw ISG, which now employs 2,800 staff worldwide, boost its net cash to £77m from £64m previously.

ISG operating divisions
Revenue change Underlying profit change
UK fit-out £609m 54% £10.5m 61%
UK construction £520m 8% £5.7m -16%
Engineering services £469m 60% £11.7m 67%
UK retail £322m 22% £5.7m 26%
Overseas £317m 15% £4.9m 44%

The engineering services division, which delivers highly-engineering projects across the technology, science and health, and education and public sectors, contributed the biggest rise in profit across the group.

Much of this was driven by European data centre work and also UK university and pharma projects.

Cossell said he expected further improvement to the division’s business performance in 2019 on the back of a forward order book up over a third to £430m compared to the previous year.

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