In its interims on 20 June Lakehouse Plc (LON:LAKE) indicated it had reached heads of terms to sell its property services and construction operations. The company announced on 17 August that the sale is now completed. The business has been divested for a potential consideration of up to £1.5m in cash. The final outcome depends on the performance of the business between the date of completion and 30 September 2021. This uncertainty is normal in the industry as there are ongoing projects and final accounts to settle on completed works. Our forecasts are unchanged as the divestment is in line with our assumptions, although the financial outcome, while potentially material, is uncertain. The provision for losses in the disposed operations, taken at the interims, of £11.8m is deemed adequate by the company at this stage.
Lakehouse has assured investors that, in conjunction with the buyer, it will seek to conclude all existing work and outstanding accounts. The consideration reflects Lakehouse management’s objectives of a successful exit while preserving its reputation by finding the appropriate buyer.
Management has successfully created a platform for growth in two promising areas. The company has attractive exposure to the gas and buildings compliance and the energy services markets, which are underpinned by regulatory requirements. Lakehouse’s scale, national footprint and reputation position it well to tender for contracts awarded by local authorities and housing associations. The sale of the underperforming areas means real focus on growth in the two core operations, which have good prospects and high margin potential.
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