9th Sep 2014 07:39
LONDON (Alliance News) - Construction services company ISG PLC Tuesday said pretax profit more than doubled in its last financial year, as operating profit in its office fit out business nearly doubled and items like restructuring charges fell, and it is expecting a further improvement this year on the back of an 18% increase in its order book.
The company reported a pretax profit of GBP6.8 million for the year to June 30, up from GBP3.0 million a year earlier, partly because restructuring costs, acquisition expenses and amortisation fell. Its closely-watched underlying pretax profit, which strips out those items rose to GBP11.5 million, from GBP9.1 million as revenue from continuing operations rose to GBP1.48 billion, from GBP1.25 billion.
Growth was driven by its UK Fit Out and Engineering Services business, which nearly doubled its operating profit. It was awarded GBP410 million of new office fit out work, including six projects in excess of GBP15 million, including the fit out for the new UK headquarters for Swiss bank UBS.
The company has also been building a data centre operation across Europe for the past two years, and won GBP330 million of new data centre contracts during its last financial year. Separately Tuesday, it said it has been appointed as lead contractor on a fourth Nordic data centre project, with a value of about GBP100 million.
ISG's order book at the end of the year stood at GBP1.01 billion, up from GBP854 million a year earlier, of which GBP926 million is for delivery in the current financial year.
It raised its final dividend by 7% to 4.91 pence, meaning its total dividend for the last fiscal year is 9.45p, up from 9.00p a year earlier.
"Our diversification strategy, combined with the recovery of our traditional UK markets, positions the company for continued growth. Overseas, our businesses are benefiting from a growing reputation. We anticipate further improvement in our results in the coming year," Chief Executive David Lawther said in a statement.
ISG said its UK construction business remained "highly challenging", and it has closed its operations in Tonbridge, Kent, as the last part of the restructuring of the UK construction unit. It booked a GBP2.8 million loss from the closed operations, compared with a GBP416,000 loss a year earlier, meaning its net profit fell to GBP2.4 million, from GBP2.5 million.
"This completes the restructuring of the division which is now on a firmer footing, achieving higher quality as well as volume of new orders and poised to deliver steadily improving returns," it said.
Overseas, it said the economic recovery in France and Italy remains slow, while Germany remains strong. It said its recent acquisition, Tecton, has delivered a good first year performance. Since the year ended, ISG has also acquired a majority stake in two local businesses in Spain specialising in the data center, office and retail fit out markets, bolstering its size in that market.
"In the Middle East, confidence is returning and the business is growing with significant progress in the hospitality sector. In Asia, while the office fit out market remains challenging, the rapid progress we have made in the retail and hospitality sectors has led to profits increasing significantly," it said.
"We anticipate benefiting from the further improvement in certain of our traditional key markets and will continue to target new growth markets and geographies. We expect to show further improvement in our results in the coming year," it added.
ISG shares were up 1.7% at 323.00 pence early Tuesday.
By Steve McGrath; [email protected]; @stevemcgrath1
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