Losses on contract start-ups and exits hit social housing regeneration specialist Lakehouse (LAKE) as a maiden full year results announcement sees shares dip 1.9% to 93p.

Finance officer Jeremy Simpson says the issues were flagged at the time of Lakehouse’s initial public offering (IPO) in March and are not expected to continue into the next financial year.

A total £8.7 million of exceptional costs, around half relating to the IPO, were excluded from Lakehouse’s underlying operating profit of £19.7 million in the year 30 September 2015.

LAKEHOUSE - Comparison Line Chart (Rebased to first)

Including exceptional costs, IPO fees and other non-cash charges, Lakehouse reported an operating profit of £4.6 million.

‘We had a £2.5 million loss on contract exits in a former social housing business where we were not comfortable with the risk profile,’ Simpson says.

There was another £2.9 million loss relating to unexpected costs on contract start-ups.

‘As we started mobilising work we realised there was additional work to do,’ Simpson says.

‘It was a grey area where it was not clear whether we had to do the work or not but for reputational reasons we decided to go ahead.

‘We’re now in discussions around whether we get paid for that and we will update the market on when we can.’

The remainder of the £8.7 million in exceptional charges reflect the costs of Lakehouse’s IPO.

Lakehouse also excludes non-cash amortisation charges which this year totalled £6.5 million from underlying profit.

‘It has been a busy year, with six acquisitions as well as the IPO,’ says executive chairman Stuart Black.

‘We are delighted that in addition to that we’ve managed to deliver results in line with expectations at the time of the IPO.’

Increases in revenue, underlying profit, the declaration of a 1.9p maiden dividend and a £2.4 billion order book are all highlights, Black says.

Broker Peel Hunt says underlying earnings per share of 12.3p in the year to 30 September 2015 were 4% ahead of its estimates. No changes are being made to a 2016 underlying EPS estimate of 12.4p.

Issue Date: 10 Dec 2015