LONDON (Alliance News) - Housing maintenance contractor Lakehouse PLC on Tuesday said challenges in its regeneration division meant it was revising down its full year expectations for underlying profit, following a difficult first half in which it was hit by headwinds across its businesses combined with internal disruption.
Shares in Lakehouse were down 40% at 28.64p on Tuesday.
Lakehouse posted a pretax loss of GBP1.8 million for the six months to March 31, compared to the GBP1.2 million profit it reported for the same period a year earlier, while underlying pretax profit, stripping out exceptional and other items, fell 45% to GBP4.7 million from GBP8.6 million.
Lakehouse said it was proposing an interim dividend of 1.00 pence per share. No dividend was paid for the corresponding period a year earlier.
Lakehouse's revenue rose to GBP167.8 million from GBP161.3 million for the first half, but cost of sales also rose to GBP147.5 million from GBP138.4 million, whilst amortisation of acquisition intangibles rose to GBP5.5 million from GBP2.9 million.
This GBP2.6 million increase reflects the acquisitions of businesses Providor Ltd, Orchard Energy Ltd and Sure Maintenance Group Ltd in the second half of the previous financial year and Aaron Services Ltd and Precision Lift Services Ltd in the first half of the current financial year.
Lakehouse said its regeneration division, which deals with refurbishment, repair and maintenance for social housing customers, was hit by "much more difficult trading conditions" during the six-month period than expected, as clients looked to cut their costs following the introduction of legislation that social landlords must reduce their rents by 1.0% each year for the four year period to 2020.
Lakehouse also faced "disruption internally" during the period after three of its shareholders looked to remove three non-executive directors from the Lakehouse board following a rough first year as a listed company. The issue was resolved in April after Lakehouse agreed to change the composition of the board.
"Whilst our operations remain on track to deliver a good core performance in the second half of the financial year, the challenges in the group, mainly surrounding regeneration, have caused the board to revise its current expectations of underlying profits (before exceptional items) for the year ending September 30," Lakehouse said in a statement.
"The board believes that the group's business fundamentals remain strong. The immediate focus is for the group to deliver its further revised expectations for the full year to September 30 and increase shareholder value over the longer term," Chairman Ric Piper said.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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