ISG stays bullish despite mixed 2022 financial performance

ISG Ltd has reported flat revenue and lower pre-tax profit figures for 2022, although the contractor noted in its annual report that it still ended the year with zero debt, a strong cash position and a record forward-order book.

The construction division of ISG (which also includes logistics and distribution), saw revenue drop marginally by about £2.5m to £1.197bn in 2022, although its forward-order book surged from £1.09bn in 2021 to £1.32bn.

In his assessment of 2022 performance, ISG chief executive Matt Blowers acknowledged challenges from Covid, high inflation and the repercussions of the ongoing war in Ukraine, adding that these and other factors “resulted in some projects being put on hold or scaled back” last year.

One of these was the Britishvolt gigafactory in Northumberland, the future of which was thrown into doubt when the company entered administration in January 2023.

Revenue from ISG’s fit-out operation dropped to £989m in 2022 compared with £1.03bn the year before, while its forward orders at year-end increased by £98m to £576.2m.

ISG said the outlook for fit-out was coloured by “turbulence in the UK economy in terms of inflation and the projected medium-term recession”, but it was confident that “the pipeline of opportunities across many sectors and geographies remains buoyant”.

The contractor is seeking to exploit the potential of modern methods of construction, after acquiring a majority stake in Irish modular specialist Kardomagh Holdings Ltd (ESS Group) in March 2022.

The annual report stated: “ISG recognised an opportunity to unlock significant growth potential and value from this underperforming business through simplification of the ESS offer and realising efficiencies in the manufacturing and onsite delivery processes… ISG continues to work in partnership with ESS on key public sector frameworks, with ESS also exploring opportunities to collaborate with peers both in the UK and overseas.”

ISG Ltd financial performance 2022

2022 2021 % +/-
Revenue £2.2bn £2.2bn 0
Pre-tax profit £11.5m £18.5m -37.8
Forward-order book, 31 December £1.9bn £1.6bn +18.7
Net cash position, 31 December £104.7m £119.9m -12.7
Source: ISG

ISG won a £300m design-and-build contract to deliver the Britishvolt factory at Cambois in December 2020. After being appointed to the job, ISG owner William Harrison joined the board of Britishvolt in March 2021. A spokesperson for the contractor told Construction News last month that it was paid in full for the work it delivered.

Britishvolt was acquired by Australia-headquartered Recharge Industries this February. It is uncertain whether ISG will play a part if and when work resumes on site, although the contractor is on record as saying it was keen to engage with Recharge.

On a more positive note, major project wins for ISG last year included a pre-construction deal for the Sunset Waltham Cross Studios expansion (pictured) in Broxbourne, worth about £600m, with ISG noting that it continues to seek opportunities in the growing film studios industry.

Major ongoing projects include the The Royal Marsden’s Oak Cancer Centre and UCL’s Institute of Neurology, and ISG (number five in the CN100 list in 2022) said it was “targeting further work following our successful appointment on the ProCure23 framework – the Crown Commercial Service’s new construction framework in partnership with NHS England and NHS Improvement”.

ISG is also delivering projects as diverse as the HMP Birmingham expansion for the Ministry of Justice and a distillery on the Scottish island of Islay.