ISG.L Regulatory News (ISG)

Interior Services Group PLC

("ISG" or "the Group")

Pre-close Trading Statement

The ISG Board is pleased to announce that trading for the year ended 30 June 2011 has remained resilient with increased activity largely offsetting lower margins in the current competitive environment. The underlying performance of the Group will be broadly in line with management expectations, and we expect to finish the year with a strong cash position in excess of £35m (June 2010 - £31m).

In the UK, our London Fit Out team has had a very good year, where we have seen an improvement in demand from our financial services sector clients resulting in revenues being up 40% year on year. Similarly, our Retail business, through its focus on food and financial retail clients, has performed particularly strongly.

Generally, the UK Construction business has had a good year and we have seen signs of improving private sector demand in the South East. The exception is in our South West division which has been slow to respond to more difficult market conditions, which will result in an exceptional restructuring cost. In addition the successful appeal against the Office of Fair Trading fine imposed in 2010 in relation to the cover pricing investigation in the industry will result in an exceptional gain in the current financial year.

Outside the UK, the picture has generally been positive. Overall volumes have increased as international customers have recommenced their capital programmes. Our Continental Europe business would have made a profitable contribution but for an unexpected loss on a large challenging project for a key customer, which will result in the division reporting a loss of circa £0.7m.

In Asia, our business has started to improve albeit late in the final quarter of the year, and as such its performance will fall short of prior year. In April we completed the acquisition of Realys, a design and project management business based in Shanghai, and we expect this to reflect positively in the region going forward. In the Middle East there has been a very good performance with a strong second half to the year as international companies have returned to Dubai and Abu Dhabi.

The current order book stands at circa £758m (June 2010 - £740m), of which £711m (June 2010 - £680m) relates to the financial year ending 30 June 2012.

In summary, in the UK we have seen signs of recovery in the South East but the rest of the country remains challenging. Overseas we have seen an increase in demand for our services from international clients. We continue to build leading positions in our core markets of construction, corporate and retail fit out, looking for areas of growth both organically and by acquisition.

The preliminary results will be announced on 6 September 2011.

5 July 2011

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