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Lakehouse reduces its losses in latest full-year

Lakehouse has reported a reduction in its operating loss for 2017 as the effects of restructuring efforts begin to materialise.

Its results for the year to 30 September 2017 revealed an operating loss of £1.1m, an improvement on the £34m loss posted for the previous year.

Lakehouse’s restructuring in 2017 saw the firm focus on its more profitable energy services and compliance divisions, which serve mainly local authorities and housing associations.

The firm maintained its construction business while downsizing its social housing property maintenance activities.

Lakehouse chief operating officer Michael McMahon (pictured) told Construction News: “This is a demonstration of us doing what we said we were going to do last year.”

He added: “We’ve looked at the business and established the energy and compliance business as being very core to the future. They represent about two-thirds of group revenues.”

Group revenue for the 12 months was £327m, down from £300m in the previous year.

The company’s construction arm, which specialises in the education sector, saw underlying revenues up 18.7 per cent to £61.8m, but underlying EBITA down almost 45 per cent to £2m.

Mr McMahon said that construction was “not an area where we expect significant growth or significant margin improvement”.

He added: “We’re looking to maintain our position as a mid-tier contractor, below the behemoths but certainly above the SMEs.”

Trading in the public sector had become increasingly challenging, Mr McMahon said, as clients were squeezing contractors on delivery and SMEs had toughened up on terms.

“I think that’s only going to get worse as a result of Carillion,” he added.

However, the company said it saw opportunity in diversifying from its traditional construction base in education, having recently won its first NHS contract valued at £2m.

Lakehouse has endured a challenging two years since its share price halved from 87p to 40p in February 2016 following a profit warning sparked by difficulties in its property services division.

After closing out legacy contracts, particularly roofing works in its property services business, Mr McMahon said Lakehouse now has a business that is “nice and clean and healthy with a strong management team and an order book we can look to build a future base from”.

He said: “We’ve got good clients who we’ve got good relationships with who pay us well, who treat us well and we give them a corresponding service for that.

“We’ve dropped a lot of clients where it was just becoming too difficult to make ends meet.”

The company confirmed that an investigation by the Metropolitan Police into fire alarm installation was ongoing and that Lakehouse had provided all information that was requested.

Lakehouse shares were up 7.8 per cent by mid-morning.

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