Final R esu t lts 30 June 2013

(1)

Final

R

lt

Results

(2)

Fit Out, Retail and Construction

,

Service Line Markets Typical Clientsyp Regiong Fit Out Office,

Engineering Services Multinational Banks, Large Corporates, Services Companies UK Continental Europe Middle East Asia * R t il R t il H it lit M lti ti l R t il Ch i UK * Retail Retail, Hospitality

& Leisure

Multinational Retail Chains, High Street Banks,

Food Retailers UK * Continental Europe * Asia * Construction Education, Hospitality and Leisure, Office,

Private Sector Developers, Large Corporates,

P blic Sector

UK Leisure, Office,

Living, Public & Community, Technology & Industrial

Public Sector

2

(3)

Industry Drivers for ISG

Service Line Key Drivers for ISG Factors

y

Fit Out •London office

•Data Centers

•Size & Complexity

- Lease Renewals and New Developments

-Global Demand for Data Services

-Skillsets

•Multinational Expansion

•Value Added Services

-Consistency Across Multiple Locations

-Commtech and Realys

Retail •Large Retailer’s Expansion

•Large Estates

•International Roll Out

•Online

- New Build & Refresh - Renewal & Refurb

- Complexity Across Multiple Locations

-Click & Connect Enabled Online

•Value Added Services

Click & Connect Enabled

-Realys

Construction (UK)

•Private Sector Recovery

•Public Sector Frameworks

•Efficiency

-Repeat Clients, Specialisation

- Innovation, Health & Safety, Sustainability - BIM, Supply Chain & Margin Improvement

(4)

Strategy Overview

UK Fit Out and Engineering Services

A l t d it t f k t ff i L d

• Accelerated recruitment of key staff in London • Training and development

• Expanding Engineering Services abroadg g g • Selective contract bidding

UK Retail

Bush HouseLondon

UK Retail

• Focus on large and repeat clients

• Exploiting our national delivery capability • Providing value added services to clients

UK Construction

• Continued focus on key private customers and public sector frameworks

• Target margin improvement - contract selection and h d ffi i

4

overhead efficiency

Nokia

(5)

Strategy Overview

International

• Growing brand reputation - working for clients in multiple locations

multiple locations

• Project sizes increasing

Google

Paris

• Widening offering to include Engineering Services, Retail, Hospitality and Consulting (design and project management)g )

• Develop scale in key markets and strengthen local presence (Germany - Tecton)

• Enter new growth markets (Brazil – ACE

)

Hackett

(6)

Trading Highlights 2012/13

• Revenue maintained despite difficult marketRevenue maintained despite difficult market conditions

• Increase in operating margin and underlying profit

photo

• Increase in operating margin and underlying profit before tax

I d fit t ib ti f UK Fit O t d

Olympic Overlay Works

Olympic Stadium London

• Increased profit contributions from UK Fit Out and Engineering Services, UK Retail, Asia and UK Construction

Olympic Stadium, London

• Middle East and Africa making a positive contribution • Reduced profit contribution from Continental Europe

due to lower activity in Italy and Russia

6

• Net cash increased to £36.1m (2012: £25.4m)

Rugby School of Modern Languages

(7)

Financial Highlights

2013

2012

+ /

Financial Highlights

Results for twelve months to June

2013

2012

+ /

-Revenue

1

£1,284m

£1,281m

-Operating Profit

1

_£9.3m

_£7.8m

_+20%

Profit Before Tax

1

_£8.5m

_£7.5m

_+14%

Net Cash

£36.1m

£25.4m

+42%

Underlying Basic Earnings per Share

1

20 80

18 03

15%

Underlying Basic Earnings per Share

1

20.80p

18.03p

+15%

Dividend per Share

9.00p

(8)

Trading – Revenue

1 June 2013 June2 2012 Variance %

UK Fit Out and Engineering Services 22% UK Construction 42% June 2013

Trading Revenue

2013 £m 2012 £m %

UK Fit Out and UK Fit Out and

Engineering Services 288 202 +42% UK Retail 267 323 -17% UK Retail 21% Continental Europe Asia UK Retail 267 323 -17% Continental Europe 92 101 -10% Middl E t & Af i 26 21 +26%

UK Fit Out and Engineering

Services

June 2012

Europe 7% Middle East &

Africa 2% Asia

6%

2

Middle East & Africa 26 21 +26%

Asia 73 81 -9% Services 16% UK Construction 43% UK Construction 538 553 -3% Group Total 1,284 1,281 -UK Retail 25% Continental Europe 8% Middle East & Africa 2% Asia 6% 8

1 _{from underlying items and continuing operations} 2_{restated to reflect the revised segmentation}

(9)

Trading – Operating Profit

1

June 2013 June 20122

Trading Operating Profit

Operating profit £m Margin % Operating profit £m Margin % UK Fit Out and

Engineering Services 5.0 1.7 3.9 1.9

UK Retail 5.5 2.1 5.0 1.6

Continental Europe 1.5 1.7 2.3 2.3

Middle East & Africa 0.1 0.3 (0.5)

-Asia 2.2 3.0 1.7 2.1

UK Construction 1.1 0.2 0.7 0.1

Group Activities (6.1) - (5.3)

-Group Activities (6.1) (5.3)

Group Total 9.3 0.7 7.8 0.6

1 _{from underlying items and continuing operations} 2

(10)

Gross and Net Cash

• £7.5m from placing - £3.5m now

44.6

£50m

invested

• Net cash inflow from operations £8.5m 30.1 42.2 36.1 36.1 £30 £35m £40m £45m £8 5

• Improvements in working capital management 25.4 £15m £20m £25m £30m

• Average gross cash balance maintained in the year of £27m (2012: £27m)

£0m £5m £10m £15m

• Term debt facility of £6.0m renewed until September 2015

St db £10 l i dit £0m

Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Gross cash Net cash

• Standby £10m revolving credit facility renewed until September 2015

(11)

Order Book

As at 30 June As at 30 June

Order Book

• Order book increased by 12% to £854m

(2012: £760m) 30 June 2013 £m 30 June 20121 £m UK Fit O t and (2012: £760m)

• In year order book up 16% to £801m (2012: £693m)

UK Fit Out and

Engineering Services 210 111

UK Retail 142 175

• Order book heavily weighted toward private sector 78% (2012: 81%)

• UK Fit Out and Engineering Services

Continental Europe 54 40

Middle East & Africa 15 14

Asia 42 30

benefiting from improvement in London office market and data centers

• UK Retail lower due to reduced new build

UK Construction 391 390

Group Total 854 760

Of hi h O 175 84

projects by certain food retail customers • Continental Europe reflects increased

retail opportunities and recovery in Italy

Of which: Overseas 175 84

• Asia higher due to increased hospitality projects in South East Asia

(12)

UK Fit Out and Engineering

Services

London lease expiries (m sq ft)

Outlook

• Increasing signs of recovery in London office fit out

market where we are a market leader – Bush House 3

4 5 6 7 m s q f t

market where we are a market leader – Bush House (£52m) and British Airways flight training campus (£27m) secured

S f £2

0 1 2

2012 2013e 2014e 2015e 2016e

• Since year-end we have secured two further £25m+ office fit out projects

• Pipeline continues to growp g • Margins in office fit out stable

• Second Nordic Data Center (£130m) now secured, ( ) only initial LOI for £15m recognised in June order book

• Anticipate increased revenue and improved results in

12

• Anticipate increased revenue and improved results in current financial year

(13)

UK Retail

Outlook

• Continued strong demand from retail bankingContinued strong demand from retail banking frameworks

• Continued higher level of refurbishment projects • Continued higher level of refurbishment projects,

lower level of new build projects with food retailers • Increasing work load with new clients such as the

Tesco

Truro

• Increasing work load with new clients such as the John Lewis Partnership and a leading high street chemist

• Anticipate additional fit out work in the new Terminal 2 at Heathrow

• Providing design led solutions to customers via Realys brand in UK

• Market stabilised, we expect to maintain results in current year

Primark

(14)

Continental Europe Fit Out

Outlook

• Order book 35% ahead with:

- Strong demand from Anglo-Saxon repeat retail clients (Marks & Spencer, Tiffany, Primark)

clients (Marks & Spencer, Tiffany, Primark) - Strong office fit out demand from technology

customers (Microsoft, Google, Alcatel Lucent) Google

Zurich

- Developing embassy work in Paris, Brussels, Moscow

• Increasing size and scope of projects • Increasing size and scope of projects

• Acquisition of Tecton to provide us with greater scale in the largest European market and access to

German property owners

• With higher order book and new acquisition, we expect to deliver an improved performance in the

photophoto

14

expect to deliver an improved performance in the current year

Paul Smith

(15)

Middle East & Africa

Outlook

• Confidence has started to return in the ME region • Order book stable – pipeline in Abu Dhabi continues • Order book stable – pipeline in Abu Dhabi continues

to be strong and in Dubai improving

I i t it f h it lit j t i

Mubadala Petroleum

Dubai

• Increasing opportunity for hospitality projects in Dubai is being targeted

• Johannesburg office established – projects delivered locally and in Kenya and Tanzania

• Anticipate further improvement in performance in current year

MacQuarie Bank

(16)

Asia

Outlook

• Order book up 40%, largely due to securing of large hospitality project in Singapore

• Increasing size and scope of projectsIncreasing size and scope of projects

• Pipeline of retail opportunities remains strong

-continue to deliver multiple projects for luxury retail

b d A i

Rolex

Hong Kong

brands across Asia

• China outlook – HK and Macau positive

• Increasing activity in hospitality and leisure in

g g

• Increasing activity in hospitality and leisure in Singapore and Hong Kong

• Specialist service brands, Realys and Commtech, continue to grow including new Commtech offer in Middle East

• Anticipate continued improvement in revenue and

16

Anticipate continued improvement in revenue and performance in the current financial year

Bank Negara

(17)

UK Construction

Outlook

• Market no longer in decline • Order book maintained

• Proportion of order book from repeat

clients/frameworks improved to >70% Wood Lane StudiosLondon

clients/frameworks improved to >70% • Increase in pipeline of larger projects

• Reorganisation during Q1 into 3 regions to optimise operational efficiency

• Planning for lower turnover but improved margins

Center Parcs

(18)

Summary

• Order book 12% higher at £854m (2012: £760m)

• Strong blue-chip multinational clients and formal/informal frameworks

remain ISG’s backbone

I

t i L

d

ffi

k t

diti

• Improvement in London office market conditions

• Opportunities continue for growth in Data Centers

• Frameworks in our UK Retail business stable, increase in value added

services

• Overseas greater brand recognition and expanding service offering

• Overseas - greater brand recognition and expanding service offering

• Continue to target new geographies where there is demand from our

blue-chip customer base

blue chip customer base

• Group well placed to benefit from recovery in UK and from our presence

in key global locations

(19)

Appendices

(20)

End Users – London Fit Out

• Office take up in Central London 10m sq ft p.a. is improving • Construction of new space has grown for the past two years

End Users London Fit Out

City Development Pipeline

p g p y

• Visibility of pre-let office fit out increasing

• Lease expiries will be a driver of demand for new build and refurb

• Buildings let on 25 year leases in the 1980’s may no longer be “fit for purpose” or “sustainable” and energy efficient

• Outlook is for activity to continue to rise – ISG a long term

London lease expiries (m sq ft)

y g

market leader

Central London availability and take‐up (m sq ft) 30 4 5 6 7 q ft ₁₅ 20 25 30 sq ft 0 1 2 3

2012 2013e 2014e 2015e 2016e

m s q 0 5 10 15 m s

2012 2013e 2014e 2015e 2016e

20 Source: Drivers Jonas Deloitte, Metropolis, Building, CBRE

0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e Availability Take up

(21)

End Users – Data Centers

•Outlook

– Global demand for data growing strongly

End Users Data Centers

Data Center Investment 2012

g g g y

– Driven by “cloud computing”, online retailing and media

providers

– Users looking for more complex solutions Germany

France Italy SE Asia

g p

– UK market expected to grow by 30% from 2011-2015

Opportunity 0 1 2 3 4 5 6 7 USA UK China £bn • Opportunity

– ISG continuing to recruit – Track record growing in UK

£bn

– RBS, Lloyds, HSBC, EDS, Credit Suisse

– Cambridge University and BT recently secured – Skillset is international

– Secondments from UK for international opportunities – Building and bidding centers in Europe and Asia

Links to our Commtech offering

– Links to our Commtech offering – Confidentiality

(22)

Where We Are

(23)

Key Customers

Fit Out Retail UK Construction

Financial Barclays Bank RBS LBG HSBC Credit Suisse Standard Standard Life

13%

Financial Barclays Bank, RBS, LBG, HSBC, Credit Suisse, Standard

Chartered, Goldman Sachs, Deutsche Bank, Citibank, Bank of America, Western Union, Morgan Stanley, Locktons, Nomura, ANZ, CIMB, Nationwide, Royal Bank of Canada, National Australia Bank, Santander, Société Générale, Nottingham Building Society, State Street Bank Credit Agricole, ACE Europe, BBVA, State Street Bank

Standard Life

Corporate ExxonMobil, BP, Deloitte, KPMG, Mayer Brown, Pinsent

Masons, K&L Gates, GE Capital Real Estate, CBRE, GSK, Pfizer, Philips, Rio Tinto, Ogilvy & Mather, Citadines, Gordon Ramsey Holdings, NBCUniversal, WPP, Norton Rose, Halliburton, Disney, GE, Boeing, Heineken, Chevron, BA, Unilever, JLT, Squire Saunders Hammond, Volvo, Foster Wheeter, CMS Cameron McKenna, AJ Gallaher, Reed Smith, Mayer Brown RWE Savills SNR Denton Statoil

Alliance Leisure, BAE Systems, Severn Trent Water, Siemens, Diageo, Village Hotel (De Vere), Greenwich Leisure Ltd, Network Rail, B&Q, Persimmon, Serco Leisure, TCN, Quantum Care

Mayer Brown, RWE, Savills, SNR Denton, Statoil

Technology EDS, O2, Guy’s and St Thomas Hospital, Microsoft, Google,

Yahoo, VM Ware, Illumina, Microsoft, BT, Thomson Reuters, redhat, Netscout, Symantec, Nokia, Skype, Siemans

Retail Monsoon, Mulberry, Selfridges, Foot Locker, Hackett, Armani, y g Tesco, Morrisons

UGG, Tod’s, Ralph Lauren, Abercrombie & Fitch, Swarovski, Louis Vuitton, Primark, Tiffany & Co, Uniqlo, Miu Miu, Oliver Sweeny, Dior, Chanel, EE, Porsche, Tesco, Asda,

Sainsbury’s, Morrisons, Marks & Spencer, Primark, Waitrose, John Lewis Partnership

Developers Swire Properties, Tishman Speyer, Hong Kong Jockey Club, Blackstone, Great Portland Estates, British Land, Kitewood

Hong Kong Club, Hammerson, Scottish Widows, Marina Bay Sands, Aviva Investors, Royal Sun Alliance, Onyx Hotels, Singapore Hotel Group, Minevva, Carlyle Group

Neptune, Aviva

Public Sector

City University of Hong Kong, Australian Embassy, DFID, Bromley College, Trustees of the Natural History Museum, The Royal Free Hampstead NHS, University of Cambridge

Public Sector Frameworks with: Ministry of Justice, Aspire Defence, North West Construction Hub, Construction Framework South West, Cardiff City Council, Sheffield Teaching Hospitals NHS Trust Addenbrooke’s Hospital Teaching Hospitals NHS Trust, Addenbrooke s Hospital, Cheshire East Low Value, Cheshire West Cornwall Framework, Gloucestershire Council Framework, Guy’s & St Thomas, Imperial College, Manchester City Council, Network Housing Group, Suffolk County Council, University of Manchester, University of Salford, YORbuild

(24)

Financials – Five Year History

Financials Five Year History

2013 2012 2011 2010 2009

Revenue1 _£1,284m _£1,281m _£1,174m _£972m _£1,046m

13%

Operating profit1 _£9.3m _£7.8m _£12.7m _£12.5m _£14.1m

Operating margin on revenue1 _0.7% _0.6% _1.1% _1.3% _1.3%

PBT1 _£8.5m _£7.5m _£12.4m _£12.0m _£13.3m

Basic Earnings per Share1 _20.80p _18.03p _29.19p _29.91p _33.65p

Dividend per share 9.00p 9.00p 15.06p 14.34p 13.66p

Net cash £36.1m £25.4m £36.1m £31.0m £32.1m

1_{from underlying items and continuing operations}

(25)

Cash Flow Statement

June 2013 £m June1 2012 £m

Cash Flow Statement

Underlying operating profit 9.3 7.8

Non-underlying operating loss (6.1) (6.3)

Depreciation/amortisation and other 4 6 6 0

13%

Depreciation/amortisation and other 4.6 6.0

Movement in net working capital 0.2 (4.9)

Taxation 0.5 (2.6)

N t h i fl f ti i ti 8 5

Net cash inflow from continuing operations 8.5

-Interest (0.3) (0.1)

Net capex (1.8) (2.7)

Acquisitions (0.2) (0.7)

Dividends paid (2.8) (4.8)

Net receipts from share placing 7.4

-Net proceeds/(repayments) of borrowings 1.7 (3.8)

Other, including discontinued operations - (2.3)

Net movement in cash and cash equivalents 12 5 (14 4)

Net movement in cash and cash equivalents 12.5 (14.4)

1 _{the prior year comparatives have been restated with the deferred contingent consideration in relation to the acquisition of Realys Group Limited}

(26)

Balance Sheet

June 2013 £m June1 2012 £m

Balance Sheet

Non-current assets Intangible Tangible

Trade and other receivables

88.2 5.6 3 0 89.3 6.4 2 9 13%

Trade and other receivables 3.0 2.9

Current assets

Inventories 1 1 0 9

Inventories

Trade and other receivables Cash and cash equivalents

1.1 319.6 42.2 0.9 275.4 30.1 N t li biliti Non-current liabilities - Bank debt - Other C t li biliti (3.5) (1.1) (0.5) (4.3) Current liabilities - Bank debt - Other (2.6) (393.6) (4.3) (346.2) Net assets 58.9 49.7 26

1_{restatement of contingent deferred consideration as post-acquisition remuneration following clarification by IFRS Interpretation Committee in}

(27)

Non-Underlying Items

Non Underlying Items

June 2013 £m June 2012 £m £m £m

Amortisation of intangible assets (2.2) (2.9)

R t t i t (3 1) (3 0)

Restructuring costs (3.1) (3.0)

Acquisition related expenses (0.6)

-Post acquisition remuneration arising from the acquisition of

1

Realys1

(0.2) (0.3)

Loss before tax from non-underlying items (6.1) (6.3)

(28)

Underlying Effective Tax Rate

June 2013 June 2012 PBT £000’s Tax £000’s Tax rate % PBT £000’s Tax £000’s Tax rate % Reported 2,457 76 3.1 1,217 238 19.0%

Amortisation of intangible assets 2 179 809 N/A 2 946 827 N/A

Amortisation of intangible assets 2,179 809 N/A 2,946 827 N/A

Restructuring costs 3,143 772 N/A 3,011 669 N/A

Acquisition related expenses 583 138 N/A 303 50 N/A

Post acquisition remuneration

on the acquisition of Realys1 183 30 N/A - - N/A

8 4 1 82 21 4 1 8 23 9%

Underlying 8,545 1,825 21.4 7,477 1,784 23.9%

January 2013

(29)

Group Order Book by Sector

June 2013

June 2012

8% 3%

June

2013

20% 6% 3%

June

2012

30% 9% 20% 9% 7% 10% 19% 12% 24% 12% 12% 16% Retail

(30)

Our Vision and Values

Our vision

To be the leading global construction services company delivering the built environment for international To be the leading global construction services company delivering the built environment for international and local customers.

We will achieve our vision by:

• engaging with our customers and understanding their needs

• providing exceptional levels of service that combine innovation and best practice • growing the business to serve customers in a wider range of sectors and geographies • employing great people in a values driven culture

Our values

Passionate about our work

Our passion drives our commitment to excellence and continuous improvement Our passion drives our commitment to excellence and continuous improvement. Committed to customer relationships

We will grow by having satisfied customers who choose to work with us again and again. Fulfilling our people's potential

Fulfilling our people s potential

We will give our people the opportunity to reach their full potential and help them achieve their ambitions. Dedicated to detail

Our care and attention to detail drives exceptional quality.

30

Acting responsibly and safely