ISG collapse causes ‘significant setback’ for M&E contractor

A subcontractor has said its profit and turnover took a hit after ISG went under last year, forcing it into a “substantial gross write-off”.

Pre-tax profit at Hensall Mechanical Services – based in the Yorkshire village of Eggborough – fell from £2.6m to £952,000 in the year to 31 December 2024.

Tier one contractor ISG was a “major client” for Hensall, managing director Chris Bond said. Its collapse last September proved a “significant setback” for Hensall and “directly contributed” to about a 40 per cent decline in turnover from £35.5m to £21.1m, he added.

The gross write-off included unrecoverable retentions, Bond said.

“Despite this disruption, the company remained profitable […] while maintaining strong cashflow and healthy balance sheet reserves,” he added.

Cash at the subcontractor was also down, at £3.38m compared with £4.4m last year.

The subcontractor works across the justice, education, leisure and commercial sectors.

Hensall was involved on some of ISG’s biggest projects, including the £56m refurbishment of HMP Liverpool – a job it bagged last March. The firm was appointed to deliver sanitary, ventilation, electrical and heating systems at the prison.

ISG expected to complete the work in the autumn of 2026.

Bond said ISG’s collapse had also “had a major impact on our suppliers and subcontractors in addition to ourselves”.

“Working in a fair and mutually beneficial manner with them is really important to us and since ISG went into administration we have worked hard to expand the range, volume and quality of organisations that we work for,” he added.

Despite the impact of ISG’s downfall, Bond said Hensall had a “strong” order book, and that he expected turnover to recover to more than £30m. He also forecast that profit would recover “to historic[al] levels”.

ISG was the sixth-biggest contractor in the UK when it went under, with revenue totalling £2.2bn.

The collapse hit subcontractors, government clients and projects up and down the country, as clients scrambled to replace the main contractor on jobs and minimise supply chain exposure.

Two firms – Vitrine Systems and Seventynine Lighting – directly blamed ISG for their demise, with Vitrine taking a £3m hit when ISG was kicked off a major job.

Numerous councils have also been impacted, with Manchester City Council recording a £3m cost and a six-month delay for a secondary school build on which ISG was main contractor.

The tier one firm also caused a £1.5m cost hike on a project to build a sports centre in Chesterfield.