Lakehouse has posted a pre-tax loss of just £3.1m for the year to 30th September 2017, compared to a pre-tax loss of £35.7m in fiscal 2016.
Underlying operating profit, before exceptional items, was down, however, from £8.5m to £7.3m on revenue of £300m (2016: £327m). The drop in turnover was attributed to the restructuring and downsizing of the property services division.
Construction, which makes up 21% of the business, contributed £61.8m to underlying group revenue, an increase of 19% (2016: £52.1m). Underlying EBITA from construction decreased by 45% to £2.0m (2016: £3.6m). This gave an underlying EBITA margin of 3.2%, down from 6.9% the previous year.
Management’s response is to train staff in submitting better claims for payments from clients. Chief operating officer Michael McMahon explained: “Although we were pleased to see revenues increase, these arose largely as a consequence of FY16 delays coming through in the year. The market is becoming ever more challenging, particularly as clients are becoming increasingly contractual and able to provide less visibility over project timing, in light of the nature of two-stage procurement. This was particularly apparent in closing out final accounts and general negotiation with clients in the year and the lower margins reflected a series of settlements that were less favourable than expected, where we may have expected a better outcome in the past. We conducted a significant review of all contracts at year end, which contributed to the lower margin…. We will be further investing in training our teams this year on contractual understanding, to ensure we present clear and robust claims for payment.”
Construction contracts won by Lakehouse last year included: a £6.1m contract with Uxendon Manor Primary School; a £2.7m contract for Harris Academy; an £8.9m contract for Hackbridge School; a £3.3m contract for Colville School; a £3.8m contract for Galleywall Primary School; a £5.1m contract for West Hatch High School; and a £2.1m contract for Millbrook Combined School High Wycombe.
Commenting on the overall group results, chairman Bob Holt said: “I am pleased with the progress made in the year, following a significant restructuring of the group at the end of 2016. We have continued to focus on building our core growth activities within Energy Services and Compliance, together with maintaining a cautious approach to Construction.
“Having downsized our Property Services businesses to manage exposure to risk, we took the opportunity to reduce central costs. I am happy to confirm that we now have a streamlined business that is both fit for purpose and appropriate for a group of our size.”
He added: “Our focus remains on operational improvement within the group, but we can now start to consider strategic development. We do not expect to return to a significant acquisition strategy, albeit we can never rule out the right deal, instead focusing on organic growth in our core growth markets within Energy Services and Compliance, which have considerable bandwidth.
“We have a settled and committed Board, a strong leadership base in each of our businesses and a great workforce in which we continue to invest. We therefore look to the future with optimism.”