Lakehouse (LAKE) - another profit warning, highlights the perils of acquisition driven growth
The asset and energy support services group, that has already generated a decade’s worth of news (unfortunately mostly negative) since listing only 14 months ago has come out with yet another profit warning. Before people jump on the AIM bandwagon we should highlight that LAKE is on the Main Market! The latest report highlights to us once again the perils of a business going on an acquisition spree yet failing to keep a tight control on management of costs in existing activities.
The interim results for the six months from 1 October 2015 to 31 March 2016 reflect a period when the Group’s Regeneration division (the largest part of the business) faced more difficult trading conditions than expected, apparently as a result of reduced client budgets and changes in procurement structures. In response to this, management focused on expanding the division’s external work offering, particularly roofing. While the business has had “considerable success in winning new work over the period ….and has been able to deliver this” it’s clear that they haven’t managed to generate the desired return. The result of all…