LONDON (Alliance News) - Lakehouse PLC shares fell on Tuesday after it said it expects to book more write-downs this year due to performance issues within the Regeneration division as the company also revealed it has won a new contract that is worth GBP37.0 million.
Lakehouse shares were down 8.3% to 29.56 pence per share on Tuesday.
The asset and energy support services group said it has continued to focus on resolving performance issues in the Regeneration division, which focuses on services such as refurbishing social housing, as it attempts to settle a number of contracts.
"Management anticipate there are likely to be further write-downs, during the current financial year as we seek to close out these issues with clients. Based on current discussions, this is expected to have an adverse impact of GBP4.0 million in the current financial year," said Lakehouse.
The company also said the general meeting held in April and the one that will be held this month will cost a total of GBP1.5 million, covering exit arrangements of certain executive members of management.
"The group is disappointed to report that the outlook for the current financial year is significantly below its previous expectations. This reflects a number of one-off and non-recurring items, upon which the board feels it is important to take immediate action," said Lakehouse.
"The actions are expected to help restore shareholder value in the medium term and the board remains confident in the opportunities and prospects for the group, notwithstanding a challenging and difficult year to 30 September 2016," the company added.
Lakehouse had an order book of GBP596.0 million at the end of June, GBP633.0 million if the new contract secured Tuesday is taken into account. At the end of March this year, the order book stood at GB636.0 million.
The new contract secured Tuesday has been awarded by ScottishPower and will lead Lakehouse to installing domestic smart meters across Northern Scotland, Wales and North West England. Lakehouse expects to install over 450,000 meters over the five-year term of the contract.
Lakehouse said it will spend GBP1.5 million in the current financial year that will end in September in order to mobilise and train more than 100 dual fuel engineers.
Elsewhere in the group, underlying trading and order visibility remains generally strong in the company's Compliance and Construction divisions, subject mainly to the timing of project work.
"The group continues to invest in areas of growth and a programme has begun to reduce and re-assign headcount in certain operational and support functions to better align costs and staff levels with the Group's future plans," said Lakehouse.
Lakehouse said it has also secured further contracts with three leading utilities for domestic meter installation and negotiations are ongoing with another two.
"This diversification will involve a rapid transition of the business into Domestic meter installation services, which the group expects will involve a cost of GBP1.0 million in the current financial year, as we redeploy and retrain existing staff," said the company.
"This reflects a recent decision by the group's existing major metering customer to take installation in house, following a number of acquisitions among our competitors," it added.
Lakehouse, as a result of the transition toward metering, believes the next financial year to the end of September 2017 will be "one of consolidation for its metering activities" and the focus will be on delivering a "top quartile performance" for clients it has secured or expects to secure in that market.
"The group is encouraged by demand in the metering market, which is expected to contribute an important element to the group's future growth agenda. The board considers the [ScottishPower] contract to be an important step in the ongoing diversification of the Energy Services division, consistent with the aim of reducing its reliance on government energy subsidies," said Lakehouse.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.