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Lakehouse posts £33m loss but boss backs turnaround

Lakehouse executive chairman Bob Holt has backed his restructured firm after the contractor slipped to a £33m loss.

Speaking to Construction News, Mr Holt said the contractor’s restructuring was complete and the firm was on course to be profitable in 2017.

Mr Holt joined the firm as non-executive chairman in July last year, after the exit of chief executive Sean Birrane in March and the resignation of former chairman Stuart Black.

Lakehouse founder Steve Rawlings, who returned to the board in April 2016, passed away in July.

“What I was keen to do was to give the new management team a new structure they felt they could work with,” Mr Holt said.

Lakehouse issued three profit warnings in 2016 and had warned its trading in the 12 months to 30 September 2016 would be “significantly below its previous expectations”.

However, Mr Holt said the new leadership team would be able to handle the challenges ahead.

“They have put their budgets together, we are happy with [those budgets], we are keen that they work to those, and if they do we will have a profitable outturn this year.

“It’s business as usual now.”

The firm posted a pre-tax loss of £33m in its results for the year to 30 September 2016, compared with a pre-tax profit of £3.2m a year earlier.

Revenue also fell slightly to £333.8m from £340.2m.

Exceptional charges in the year included £6.6m in contract losses in its property services division, £1m on redundancy payouts for 100 staff, and £1.5m paid out to former directors.

Mr Holt said the property services division had “endemic issues” and was “very badly performing” over the course of 2016.

He confirmed the contractor had exited the roofing market, and would be much more selective in the property services work that it bid for.

The senior team at Foster Property Maintenance, the company’s East of England operation which was acquired in 2013, had all exited the firm, according to Mr Holt, with “the next layer down” now running the business.

He added that Foster was expected to turn over around £30m this year.

In construction, revenue fell by 29.1 per cent to £52.1m, while profit also slipped by 25.5 per cent to £3.6m, which the firm attributed to a shift among clients from single-stage to two-stage procurement.

However, Lakehouse said it had managed to maintain contract margins of 6.9 per cent in this division, with “few of the commercial disputes that we have experienced in property services”.

Mr Holt added that the firm had won a number of schools contracts in the South-east worth more than £5m towards the end of 2016.

He also said the firm would be unlikely to target more acquisitions, with Lakehouse embarking on “a year of cautious growth”.

“We should never say never… but we are not actively pursuing acquisitions as we sit here now.”

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