ISG’s specialist fit-out business has been trading well, even surpassing management’s own expectations, but four remaining live construction projects that were taken on during 2012 and 2013 have caused the company problems.
“These contracts are being progressively completed and closed out,” ISG said in a trading statement today.
As previously reported, ISG made a loss of £21m in the first half of its financial year. It has closed its London Exclusive Residential and Tonbridge businesses of UK Construction and has been completing the remaining live contracts and continuing to pursue all contractual entitlements.
To accelerate final closure of these areas and collection of final accounts ISG is making a further provision of £5.5m for London Exclusive Residential and £5m for Tonbridge. The board explained: “This covers unexpected cost overruns and delays on the remaining four live projects, unanticipated sub-contractor insolvencies and a mixed outcome of final account settlements and adjudication decisions, all of which have recently arisen.”
It added: “We believe the poor performance and painful restructuring of the UK Construction division is now behind us.”
Looking ahead, the order book stands 6% higher at £1,106m (May 2014: £1,045m) of which £875m (May 2014: £820m) relates to the financial year ending June 2016. Of the order book total, £376m (May 2014: £219m) relates to overseas activity.
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