Lakehouse's (LON:LAKE) recent report on the six months to March 2017 shows the business starting to improve, following a review of strategy and operations that commenced in mid-2016. Three of the four divisions showed a better underlying revenue and EBITA performance versus last year.
The troubled Property Services operation had much reduced revenue, as it completed existing work programmes and started to rebuild. There appears to be a good level of demand for all of the company’s services, as evidenced by the 7% increase in the order book to £580m.Central costs have been reduced. Net debt stood at £25m at end March 2017, 1.1x 2016 EBITDA. The mid-term prospects are positive, in our view, despite the negative reaction of the share price following the interims. Consensus numbers are unaltered for the year to September 2017.
Stepping back to regain footing
Lakehouse reported H1 revenue down 11% at £150m. Property Services revenue halved to £32.5m as legacy projects were completed while new wins have yet to have an impact, contributing to the overall group £17m revenue reduction.
However, revenue increases were achieved elsewhere. Compliance achieved a 20% increase in revenue, which was ahead of management expectations, and the group contract win rate was good. The H1 £1.1m underlying EBITA loss in Property Services, versus a profit last year of £1.9m (H116), accounts for more than the £2.5m reduction in underlying EBITA at the group level, to £2.6m. The group operating cash outflow of £0.3m in the period reflects the seasonality of the business and was an improvement on management expectations.
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