1 Feb 2016 07:00
PRESS RELEASE
1 February 2016
Lakehouse plc ("Lakehouse" or the "Group")
Trading Statement
Lakehouse plc ('the Group') announces a trading update for the period from 1 October 2015 to date.
The Group has continued its strong bidding success since the start of the year, increasing our number of framework contracts by 22%, from 181 to 221. Integration is well advanced on the five acquisitions made in 2015 and all are performing in line with our expectations.
We are however operating against a backdrop of active cost reductions taking place within client organisations, resulting in part from a requirement for social landlords to reduce rents by 1% p.a. for the next four years. In certain cases, client expenditure commitments are being held back until budgets are confirmed in April 2016. As such, despite our success in securing positions on key frameworks, including resecuring Eastern Procurement, the expected level of tenders from these frameworks has not materialised at the rate previously expected. This has led to a slower than expected first quarter performance in Regeneration and as a consequence, a lowering of our financial expectations for the division in the current financial year.
In Energy Services, we are securing revenues in line with our expectations, but the aforementioned funding pressures on social landlords mean that insulation contracts are having to be bid at lower margins. An important element of our strategy is the UK domestic smart meter roll-out programme, which has experienced a number of delays, leading the energy companies to delay procuring installations and we no longer expect to see any domestic smart metering work of note to take place by September 2016. These factors will impact the expected profits of the division in the current financial year. We remain confident that our model of diversification within Energy Services will allow us to adapt successfully to the new energy company obligation programme in 2017 and, more widely, reduce our exposure to energy subsidies. In particular, we remain optimistic of the opportunity in UK domestic smart metering, once mobilisation commences.
The Compliance division is performing in line with management expectations and our three recent acquisitions are all performing well. The division is already seeing the benefits of accessing a wider pool of clients and mandatory services that provide significant future opportunities.
We continue our policy of bidding selectively in our Construction division and only pursue those projects that will deliver the appropriate balance of risk and overall returns for the year.
In light of the above headwinds the Group now expects the financial outturn for the current year to fall short of its previous expectations and to see a reduction on last year's profit level.
The focus of the Group remains to continue developing a broad business which is not susceptible to challenges in any one geographic region, commercial market or service, whilst maintaining strong margin performance. Our cross selling activities are yielding a number of opportunities and, longer term, we believe that we are establishing a sustainable growth model.
Commenting on today's announcement, Stuart Black, Executive Chairman of Lakehouse, said:
"Following our successful maiden results as a public company, we have seen recently, a number of headwinds facing our markets come together to impact our business. I am confident that having built a Group with a range of services that allow us to help our clients address their operational and financial needs, we remain well placed to overcome these challenges."
ENDS
Enquiries:
Lakehouse | Telephone: 01708 758 800 |
Stuart Black, Executive Chairman | |
Sean Birrane, Chief Executive Officer | |
Jeremy Simpson, Chief Financial Officer | |
Financial Public Relations | |
Camarco | Telephone: 0203 757 4992 |
Ginny Pulbrook | |
Tom Huddart |
Notes to Editors:
Lakehouse is an asset and energy support services group that constructs, improves, maintains and provides services to homes, schools and public buildings with a focus on clients in the UK public sector and regulated markets. Services are delivered through four divisions: Regeneration, Compliance, Energy Services and Construction. The Group was founded in 1988 and is headquartered in Romford, Essex. It currently employs approximately 2,400 staff from 35 offices situated throughout England and Scotland.