Fit-out boom helps ISG profit head north

Fit-out was the star performer at ISG last year as a string of deals including a £100m job to overhaul the Canary Wharf headquarters of Barclays Bank helped boost revenue at the division by a third.

The business accounted for more than half the group’s revenue in 2021, which improved 11% to £2.3bn.

Group pre-tax profit recovered from £8.9m during a covid-hit 2020 to £18.5m with fit-out’s earnings before interest, tax, depreciation and amortization (EBITDA) jumping a quarter to £36.5m.

ISG said the year was one of fit-out’s most profitable and was helped by a slew of high-profile deals including the new UK headquarters of US tech giant Facebook in King’s Cross and a £75m deal for Apple’s new office at the Battersea Power Station redevelopment.

Turnover at the division was up to £1.4bn from just over £1bn last time with its forward order book improving from £700m to £777m.

Business is expected to remain brisk as firms look at ways to give their offices a makeover in the wake of the pandemic.

In January, new chief executive Matt Blowers, the former head of fit-out who replaced Paul Cossell after five years in charge at the start of the year, told Building: “An office is a shop window into a business’s culture. There is a massive war on talent not just in our sector but across the piece. People are investing significant money on getting their facilities in a great place to retain talent and attract the best.”

ISG added that its Agility business, which concentrates on smaller fit-out schemes, saw turnover top the £100m mark for the first time.

The firm’s construction business, which last year completed the new Compton and Edrich stands at Lords cricket ground, saw revenue slip 3% to £670m but EBITDA was up to £4.4m from £1.9m in 2020.

The business, which has an improved forward order book of £531m, said it wants to use more modern methods of construction and in March this year ISG shelled out €10.4m (£9m) in cash for a 61% stake in Irish firm Kardomagh Holdings which operates as ESS Modular and which has four offices, including Belfast and Manchester, and three factories.

ISG said it had bought a controlling share in order “to bring additional MMC capability and utilise its manufacturing facilities to the wider ISG business and to fast-track ISG’s journey developing and implementing leading edge-built solutions”.

The firm’s engineering services sector, which includes science, health and data centre work, saw income fall 44% to £164m with EBITDA slipping two-thirds to £2.5m. ISG blamed the drops on project delays and travel restrictions caused by the pandemic.

In its accounts, the firm said that work from its engineering services business in Belgium had fallen from £165m in 2020 to just £1.2m last year although work in Spain had jumped from £600,000 to £40.7m.

The number of people employed at the business remained flat last year at 3,000 with the firm shelling out £1.9m on termination payments – down from £4.4m. It added that the amount it claimed in government grants for job retention was £100,000, down from £6.1m the year before.

The group’s overall forward order book was up £100m to £1.6bn with net cash up to £120m from £101.5m.