Acquisition

ISG PLC

("ISG" or "the Group")

Acquisition of 90% of the share capital of German office fit out company Tecton Engineering GmbH.

ISG, the international construction services group, is pleased to announce that it has completed the acquisition of 90% of the share capital of Tecton Engineering GmbH ("Tecton") for a maximum consideration of €2.6m (£2.2m).

Tecton provides office fit out and facilities management services to the owners of commercial office buildings, primarily in the Rhine/Ruhr area, Berlin and Frankfurt in Germany. The managing director, Christoph Eckes, who will retain his 10% shareholding in the business, will continue to manage the business going forward. The vendor, Daniela Woell, will be exiting the business and her husband, Frank Woell who established the business, will remain as a consultant until 31 December 2015.

Tecton, established in 2000, is a leading provider of office fit out and facilities management based in Cologne and Berlin. Its clients are predominantly insurance and investment companies who are owners of German commercial office real estate, including IVG, MEAG, Talanx, DEVK, AXA, Immofinanz and Generali and German blue chip international businesses such as Deutsche Bank, RWE and Bayer.

Tecton's revenue in the year ended 31 December 2012, was approximately €9.1m (£7.4m) and it generated a profit before tax of €0.9m (£0.7m). At completion Tecton had net assets of €0.8m (£0.7m) and employs 13 people.

The acquisition of Tecton will:

·; Give ISG access to a largely German customer base who are the owners of office space in the key cities in Germany;

·; Complement ISG's existing German office fit out business that focuses on ISG's existing Anglo-Saxon multinational clients;

·; Provide ISG with greater scale in the largest European market;

·; Provide an opportunity to introduce ISG's network of international offices to Tecton's German customer base;

·; Strengthen ISG's German management team.

At completion, €2.1m (£1.8m) of consideration will be paid, of which €1.6m (£1.4m) will be settled in cash and €0.5m (£0.4m) in ISG ordinary shares. The cash element was raised as part of the recent placing of ISG shares announced on 21 June 2013. The deferred consideration of €0.5m (£0.4m), of which 75% will be settled in cash and 25% in new ISG ordinary shares, is payable over the following three calendar year ends based upon the achievement of certain annual turnover targets by the business.

At completion 265,909 ordinary shares of 1p each in the Group will be issued to the vendor based on a price of £1.704 per share. The new ordinary shares will rank pari passu with the existing shares of the Group. Application has been made to the London Stock Exchange for the new ordinary shares to be admitted to the Alternative Investment Market and it is expected that admission will take place on 30 July 2013. Following the allotment, the total issued share capital of the Group has increased to 38,845,037.

David Lawther, Chief Executive Officer of ISG, commented:

"The Tecton acquisition is part of our strategy to continue to invest in overseas markets and to build scale in our key international locations. Tecton's largely German customers will widen our client base in Germany and allow us to offer ISG's wider service offering to these customers."

25 July 2013

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