ISG turning the corner

Since the year-end, ISG has bought a 20 per cent initial stake in ACE, a Brazil-based fit-out and refurbishment business, while its European operation has been strengthened by the purchase of Tecton Engineering based in Germany.

Last year, the office fit-out business grew revenue from £202m to £288m, including a maiden contribution of £88m from overseas engineering services, where ISG specialises in setting up data centres. The forward order book nearly doubled to £210m. UK retail activity, where the group works typically with supermarket chains and high street stores, saw revenue fall from £323m to £267m, but a re-organisation the previous year helped to lift operating margins from 1.6 per cent to 2.1 per cent and boost operating profits by 10 per cent to £5.5m.

Trading in UK construction remains tough, though, and restructuring costs of £3.1m partly explain the large gap between the group's underlying and reported profits. But, while divisional turnover fell from £554m to £538m, a slight margin improvement pushed operating profits up from £0.7m to £1.1m.

Analysts at Numis are forecasting current year pre-tax profits of £11.5m and EPS of 22.9p, up from £8.5m and 20.7p in 2013.