Interior Services results are on the money

published 11 September 2012

Interior Services, an international construction services group, delivered a set of full year results that came in almost entirely on the money.

Revenue rose from £1,174m to £1,281m, ahead of expectations, while underlying pre-tax profit was on the mark at £7.5m (2011: £12.4m).

Underlying basic earnings per share were slightly above analyst forecasts of 17.80p at 18.01p (2011: 29.19p).

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The results were not entirely positive however, with the total dividend at 9.00p, as previously announced, compared to 15.05p the previous year, reflecting a reduction in cash levels to £25.4m (2011: £36.1m).

Meanwhile, a reduction was seen in UK profits as a result of the challenging economic environment, although this was offset by profits from overseas business, which nearly quadrupled to £3.5m.

The firm was keen to stress that its construction activity is ahead of the prior year on the back of the completion of "substantial" projects for the London 2012 Olympic and Paralympic Games following on from the successful delivery of the Velodrome.

Regionally, UK Fit Out revenue edged higher to £347m (2011: £342m), while operating profit fell 19% to £6.5m (2011: £8.0m). The order book at the year end was up 7.0% to £182m.

Revenue at Continental Europe Fit Out leapt 39% to £101m (2011: £73m), turning a loss of £0.8m to a profit of £2.3m. The order book doubled to £40m, with continuing solid demand from multinational clients.

Middle East Fit Out revenue climbed 6% to £21m from £20m, while the order book soared 75% to £14m.

Asia Fit out rose 22% to £81m (2011: £67m), with the operating profit coming in up 66% at £1.7m (2011: £1.0m). The order book is slightly lower at £30m (2011: £35m), reflecting a slower South East Asia market.

In the Food Retail business, revenue decreased by 9% to £199m (2011: £218m), reflecting decrease in new build project activity, pushing the operating profit to £2.3m (2011: £5.2m), with margins affected by customers focusing on reducing costs. The order book was lower at £116m (2011: £140m), reflecting fewer new build opportunities with certain customers.

The construction business reported a 17% rise in revenue to £533m (2011: £455m) on the back of the LOCOG London 2012 overlay works contract, but warned market conditions remain challenging. The order book remained steady at £378m and is now weighted 65% towards the private sector (2011: 55%).

David Lawther, Chief Executive Officer, said: "ISG has delivered a resilient performance in market conditions that continue to be challenging. In the UK, we have maintained our market leading positions, and have successfully delivered substantial projects for LOCOG as well as for our key customers and frameworks. In addition, we have targeted a number of growth sectors and achieved particular success in data centres.

"Internationally, we have experienced strong growth in Europe and Asia where we continue to see opportunities for growth, and as a result we have succeeded in quadrupling our profits from our overseas businesses.

"Looking ahead, the group is well placed to benefit from a recovery in the UK and from our presence in key global locations that are attracting inward investment. We are confident of our strategy and will continue to target growth both organically and via acquisition."

The share price rose 0.4% to 124.50p by 15:28.