Lakehouse plc Annual Report 2015 Annual Report 2015 The Lakehouse Way Who Lakehouse is an asset and energy support we are services group, focused on customers and their communities. We make a difference to people’s lives by constructing, improving, maintaining and providing services to homes, schools, public and commercial buildings. Lakehouse was founded in 1988 and we have grown consistently since, achieving revenue of £340.2m in 2014/15. With our headquarters in Romford, Essex, we employ more than 2,400 people through 35 offices across the UK. Lakehouse listed on the Main Market of the London Stock Exchange in March 2015. Strategic Report Governance Overview 43 Executive Chairman’s introduction IFC Who we are to Corporate Governance Why invest in Lakehouse? 44 Board of Directors About Lakehouse 46 Corporate Governance Report 01 Our manifesto 56 Directors’ Remuneration Report 01 Financial highlights 69 Directors’ Report 02 The Lakehouse Way 71 Directors’ responsibilities Strategic review Financial statements E 12 xecutive Chairman’s Statement 72 Independent Auditor’s Report to I 14 nterview with Sean Birrane, CEO the members of Lakehouse plc 17 Company snapshot 77 Consolidated statement of M 18 arket overview comprehensive income B 20 usiness model 78 Consolidated statement of O 22 ur strategy financial position K 24 ey performance indicators 79 Consolidated statement of changes C 26 hief Executive Officers’ in equity Divisional review 80 Consolidated statement of cash flows 30 Principal risks and uncertainties 81 Notes to the consolidated R 34 esources, relationships financial statements a nd sustainability 114 Company balance sheet 115 Company statement of changes in equity Performance 116 Notes to the Company F 38 inancial review financial statements More online You can find more about our business on our website 118 Corporate directory at www.lakehouse.co.uk/about-us/manifesto Why invest in Lakehouse? —W e have a reputation for delivering for our customers, which has enabled us to build productive long term relationships and a well-respected brand —W e are well positioned in large and fragmented markets, providing us with a pipeline of high-quality opportunities —W e have a proven growth strategy and the financial resources to successfully implement it —W e are building a broadly based business, which is less dependent on any one region, market or service —O ur order book gives us good visibility for our future growth plans —W e turn a high proportion of our profits into cash, giving us the funds to invest and to reward shareholders through dividends More online You can find more about our business on our website at www.lakehouse.co.uk/about-us/manifesto How we measure What Our success we do history To us, success means: We provide our services 1988 — Delighting our customers through four divisions: — Lakehouse founded by delivering great service — Keeping our people safe Regeneration 2008 Regeneration provides planned and — Strategic business review responsive maintenance services for social housing clients, which are 2010 Which helps us to: mainly local authorities and housing — Announced Contractor of — Win new work and retain our associations. The division operates the Year at Building Awards existing contracts through three businesses: Regeneration — Expand our business by cross-selling (South), Regeneration (East) and 2011 and entering new regions Regeneration (North). — K&T Heating acquired 2012 — Allied Protection acquired Which in turn leads to: Compliance — A rising order book and high Compliance comprises planned and 2013 revenue visibility responsive maintenance, installation April — Growing revenues and profits, and repair services to local authority — Launch of new Lakehouse brand which deliver value to shareholders and housing association clients, in the areas of gas, fire and electrical, water September and air hygiene, and lifts. These services — Announced Contractor of the Year cover clients’ social housing and public at Building Awards for second time Our locations building assets. October — Foster Property Maintenance acquired Energy Services Energy Services provides a range of 2014 energy efficiency services for primarily April social housing and private homes. The — Everwarm acquired division also uses these services to deliver — Rolled out the Customer Journey carbon emissions savings for energy companies, enabling them to meet their October legislative targets. In addition, the division — H2O Nationwide acquired offers renewable technologies, smart metering services and energy brokerage 2015 to customers throughout the UK. March — Admission to London Stock Exchange May Construction — Providor acquired Construction offers refurbishment and — Winners of Housing Excellence small to medium-sized public building Customer Service Award works, predominantly for local authority clients. The division focuses on clients July in the education sector, although it also — Orchard Energy acquired delivers some works to a range of other public buildings. September — Sure Maintenance acquired November — Aaron Services acquired December — Precision Lifts acquired Our We work with our customers to build solutions Overview manifesto that make a difference to the lives of their customers. We are here for the long term and aim to grow our relationships. We want our communities to thrive. We make an impact through the depth of our Strategic review expertise, so we deliver what our customers want. We make an impact through deeper relationships. We call it the ‘Lakehouse Way’ of doing things. The following pages describe this in more detail. Performance Financial highlights £336.6m £340.2m Governance Underlying2 revenue Revenue £22.2m 6.6% Underlying1 EBITA Underlying1 EBITA margin Financial statements £21.6m £4.6m Underlying2 profit before tax Operating profit £3.2m 13.7 p Profit before tax Underlying2 basic EPS 1.9 p £6.6m Basic EPS Net cash 1.9 p Dividend per share 1. EBITA is earnings before interest, tax and amortisation of acquisition intangibles. Underlying EBITA is defined as operating profit before deduction of exceptional and other items, as outlined in Note 7 and on the face of the income statement. Underlying EBITA is the same as ‘Operating profit before exceptional and other items’ on the face of the financial statements, but used as terminology in light of being a key performance measurement for management in the Group. 2. As set out in the income statement, other underlying numbers are stated before deduction of exceptional and other items, as outlined in Note 7 and on the face of the income statement. Underlying profit after tax and underlying earnings per share are net of an imputed tax charge. Underlying revenue represents revenue for the underlying Group and excludes contract losses on businesses being exited. Lakehouse plc Annual Report 2015 01 We provide a broad and growing range of services to customers across the public and private sectors. But no matter what we are doing or who we are doing it for, we are proud to follow the ‘Lakehouse Way’ of working. More online You can find more about our business on our website at www.lakehouse.co.uk/about-us/manifesto 02 Lakehouse plc Annual Report 2015 The We are customer-centric Overview Lakehouse Way Our business revolves around the customers we work with. This ensures that everyone at Lakehouse – not just Strategic review our front line employees – is always focused on our customers’ needs. Performance Governance Financial statements 15,817 training hours completed by our employees Lakehouse plc Annual Report 2015 03 The We believe in building to last Lakehouse Way Our long term approach is reflected in the quality of our work and in the strength and depth of the relationships we develop. 93% customer satisfaction More online You can find more about our business on our website at www.lakehouse.co.uk/about-us/manifesto 04 Lakehouse plc Annual Report 2015 Overview Strategic review Performance Governance Financial statements 05 Lakehouse plc Annual Report 2015 More online You can find more about our business on our website at www.lakehouse.co.uk/about-us/manifesto 06 Lakehouse plc Annual Report 2015 The We leverage our expertise Overview Lakehouse Way for every job Our top technical specialists support our customer-facing Strategic review teams and share new ideas across our business, so all our customers benefit. Performance Governance 35 Financial statements offices across the UK Lakehouse plc Annual Report 2015 07 The We put our customers first Lakehouse Way Our priorities and our success are determined by our impact on our final customers – the residents, teachers, pupils, members of staff and the general public who benefit from our work on their homes, schools, public and commercial buildings. 181 frameworks at 30 September 2015 More online You can find more about our business on our website at www.lakehouse.co.uk/about-us/manifesto 08 Lakehouse plc Annual Report 2015 Overview Strategic review Performance Governance Financial statements 09 Lakehouse plc Annual Report 2015 The We ‘keep it real’ Lakehouse Way We are passionate about our work and always look for opportunities to make a real difference to people. £595m Group order book More online You can find more about our business on our website at www.lakehouse.co.uk/about-us/manifesto 10 Lakehouse plc Annual Report 2015 Overview Strategic review Performance Governance Financial statements 11 Lakehouse plc Annual Report 2015 Executive Chairman’s Statement I am pleased to report that we delivered a good operational and financial performance during a year of important change. As well as our successful IPO in March 2015, we made excellent progress with our organic and acquisitive growth strategy, completing four value-enhancing acquisitions in the period. Stuart Black Executive Chairman 12 Lakehouse plc Annual Report 2015 Welcome to our first Overview Annual Report. Strategic review Introduction established network of business relationships, enables us to I am pleased to report that we delivered a good operational identify quickly potential complementary acquisitions which can and financial performance during a year of important change.